An observability paradox in linked enforcement

• 成果类型: Article
• 署名作者: Wen, Quan; Zheng, Bingyong
• 署名单位: University of Washington; University of Washington Seattle; Shanghai University of Finance & Economics
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2024.07.005
• 发表日期: 2024
• 页码: 206-220
• 关键词: Repeated game; Linked enforcement; Imperfect observation; multimarket contact; issue linkage

摘要

The presence of observation errors limits players' ability to detect deviations, and hence the possibility of efficient cooperation in repeated games. When players interact repeatedly in multiple games with imperfect observation in at least one game, however, we find a novel spillover effect that enhances players' ability to sustain cooperation. This finding suggests the presence of observation error can increase the likelihood of efficient cooperation when players interact in multiple repeated games simultaneously. Our result has important implications for industrial organizations, relational contracts, and international cooperation.