Information and Timing in Repeated Partnerships
In a repeated partnership game with imperfect monitoring, we distinguish among the eﬀects of (1) shortening the period over which actions are held ﬁxed, (2) increasing the frequency with which accumulated information is reported, and (3) reducing the amount of discounting of payoﬀs between successive periods. While reducing the amount of discounting generally improves incentives for cooperation, the other two changes can have the reverse eﬀect. When the game is speciﬁed in the customary way with information reported at the end of each period of ﬁxed action, the net eﬀect of shortening the period length can be to destroy all incentives for cooperation, reversing the usual conclusion associated with the Folk Theorem for repeated games. Moreover, when interest rates are low, reducing the frequency of information reporting can greatly enhance the eﬀiciency of equilibrium.
Abreu, Dilip; Milgrom, Paul R.; and Pearce, David G., "Information and Timing in Repeated Partnerships" (1988). Cowles Foundation Discussion Papers. 1118.