"Weakly Belief-Free Equilibria in Repeated Games with Private Monitoring"

Repeated games with imperfect private monitoring have a wide range of applications, but a complete characterization of all equilibria in this class of games has yet to be obtained. The existing literature has identified a relatively tractable subset of equilibria. The present paper introduces the notion of weakly belief-free equilibria for repeated games with imperfect private monitoring. This is a tractable class which subsumes, as a special case, a major part of the existing literature (the belief-free equilibria), and it is shown that this class can outperform the equilibria identified by the previous work.

Optimally Empty Promises and Endogenous Supervision

We study optimal contracting in team settings, featuring stylized aspects of production environments with complex tasks. Agents have many opportunities to shirk, task-level monitoring is needed to provide useful incentives, and because it is difficult to write individual performance into formal contracts, incentives are provided informally, using wasteful sanctions like guilt and shame, or slowed promotion. These features give rise to optimal contracts with "empty promises" and endogenous supervision structures. Agents optimally make more promises than they intend to keep, leading to the concentration of supervisory responsibility in the hands of one or two agents.Partnership, Teams, Moral hazard, Monitoring, Supervision, Informal sanctions

Self-Commitment-Institutions and Cooperation in Overlapping Generations Games

This paper focuses on a two-period OLG economy with public imperfect observability over the intergenerational cooperative dimension. Individual endowment is at free disposal and perfectly observable. In this environment we study how a new mechanism, we call Self-Commitment-Institution (SCI), outperforms personal and community enforcement in achieving higher ex-ante e¢ ciency. Social norms with and without SCI are characterized. If social norms with SCI are implemented, agents might freely dispose of their endowment. As long as they reduce their marginal gain from deviation in terms of current utility, they also credibly self-commit on intergenerational cooperation. Under quite general conditions we .nd that, even if individual strategies are still characterized by behavioral uncertainty, the introduction of SCI relaxes the inclination toward opportunistic behavior and sustains higher e¢ ciency compared to social norms without SCI. We quantify the value of SCI and investigate the role of memory with di¤erent social norms. Finally, applications on intergenerational public good games and transfer games with productive SCI are providedCooperation; Free disposal; Imperfect public monitoring; Memory; Overlapping generation game; Self-Commitment Institution;