Econometrica: Sep, 2015, Volume 83, Issue 5
Truthful Equilibria in Dynamic Bayesian Games
Johannes Hörner, Satoru Takahashi, Nicolas Vieille
This paper characterizes an equilibrium payoff subset for dynamic Bayesian games as discounting vanishes. Monitoring is imperfect, transitions may depend on actions, types may be correlated, and values may be interdependent. The focus is on equilibria in which players report truthfully. The characterization generalizes that for repeated games, reducing the analysis to static Bayesian games with transfers. With independent private values, the restriction to truthful equilibria is without loss, except for the punishment level: if players withhold their information during punishment‐like phases, a folk theorem obtains.
Supplement to "Truthful Equilibria in Dynamic Bayesian Games"
This supplement contains additional material on Markov Decision Problems and details on the proof of Theorem 5.