Chapter 6 Repeated games of incomplete information: Non-zero-sum

Non-zero-sum infinitely repeated games with incomplete information are an appropriate model to analyze durable relationships among individuals whose information is not symmetric. The results in the zero-sum case are used explicitly in the non-zero-sum case. In the tradition of the Folk theorem, the characterization of equilibria makes use of individual rationality conditions. In the chapter, the repetition of the game has the effects of an enforcement mechanism and of a signalling mechanism at the same time. Most results available at the moment concern a particular model: there are two players, exactly one of whom is completely informed of the situation (this is called lack of information on one side), with each player observing the actions of the other after every stage (full monitoring). Nash equilibria have been studiedhe main result is a characterization of Nash equilibria in infinitely repeated games with lack of information on one side; the results of the zero-sum case are used to evaluate the individually rational levels of each player. Communication equilibria has also been studied the main theme is that an infinitely repeated game contains enough communication possibilities to obtain the equivalence of different solution concepts. The game (as in Aumann's correlated equilibrium), together with the structure of the repeated game itself, is hopped to be sufficient to obtain the effect of any coordinating device, acting at every stage of the game.