CIRJE-F-246. Kandori, Michihiro and Ichiro Obara, "Less is More: An Observability Paradox in Repeated Games", November 2003.

We present a repeated prisoners' dilemma game with imperfect public monitoring, which exhibits the following paradoxical feature: the equilibrium payoff set expands and asymptotically achieves full efficiency as the public signal becomes less sensitive to the hiden actions of the players.