Abstract:
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This paper examines different Brownian information structures over varying time
intervals. We focus on the non-limit case, and on the trade-offs between information quality and quantity when making a decision whether to cooperate or defect in
a prisoners' dilemma game. In the best-case scenario, the information quality gains
are strong enough so that agents can substitute information quantity with information
quality. In the second best-case scenario, the information quality gains are weak and
must be compensated for with additional information quantity. In this case, information quality improves but not quickly enough to dispense with the use of information
quantity. For suficiently large time intervals, information degrades and monitoring
becomes mostly based on information quantity. The results depend crucially on the
particular information structure and on the rate at which information quality improves
or decays with respect to the discounting incentives.
JEL: C73, D82, D86.
KEYWORDS: Repeated Games; Frequent Monitoring; Information Quantity; In-
formation Quality. |