Abstract

The chapter provides an overview of recent results on infinitely repeated games in which monitoring and interactions are local. The chapter surveys Folk Theorems for games with local monitoring, and results characterizing optimal punishments in separable local public goods games. The relationship between the monitoring structure and the equilibrium correspondence is a key topic of enquiry. Results clarify the roles played by contagion, ostracism, and communication in shaping equilibrium outcomes. Understanding how network measures of social cohesion and of information diffusion can affect trust in communities is the main applied aim of the literature.