The Nash-threats folk theorem with communication and approximate common knowledge in two player games

We show that the use of communications to coordinate equilibria generates a Nash-threats folk theorem in two-player games with “almost public†information. The results generalize to the n -person case. However, the two-person case is more difficult because it is not possible to sustain equilibria by comparing the reports of different players, and using these “third parties†to effectively enforce contracts.

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