Phillip Johnson (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM)) David K. Levine (Department of Economics, UCLA) Wolfgang Pesendorfer (Department of Economics, Princeton University)
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In an environment of anonymous random matching, Kandori [1992] showed that with a sufficiently rich class of simple information systems the folk theorem holds. We specialize to the Prisoner's Dilemma and examine the stochastic stability of a process of learning and evolution in this setting. If the benefit of future cooperation is too small, then there is no cooperation. When the benefit of cooperation is large then only cooperation will survive in the very long run.
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Paper provided by Centro de Investigacion Economica, ITAM in its series Working Papers with number
9805.
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