This paper studies the role of memory and communication in games between ongoing organizations. In each organization, each individual, upon entry into the game, replaces his predecessor who has the same preferences and faces the same strategic possibilities. Entry across distinct organizations are asynchronous: no two individuals alive at a date have entered at the same time. We model these as repeated games between overlapping generations of individuals (OLG games). It has been shown elsewhere that Folk Theorems hold in OLG games with long enough lived individuals who can perfectly observe. However, the Folk Theorem fails for many games when individuals have no prior memory, i.e., no individual can witness events that occur before his entry into the game. We examine OLG games without prior memory. We then examine such games when the past can be communicated by one generation to the next through "cheap talk" communication. With costly communication, an approximate Folk Theorem holds only when there is some altruistic link between cohorts in an organization. The equilibria in this Folk Theorem require a special form of intergenerational sanctions. In these sanctions, punishment is sometimes carried out long after both victim and perpetrator have left the game. Without this special structure, altruism may in fact destroy cooperation when it would otherwise be possible.
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Paper provided by Georgetown University, Department of Economics in its series Working Papers with number
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Length: 28pp Date of creation: 12 Mar 2001 Date of revision: Handle: RePEc:geo:guwopa:gueconwpa~01-01-07
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Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Roger Lagunoff & Dino Gerardi & Luca Anderlini, 2008.
"Communication and Learning,"
Working Papers
gueconwpa~08-08-01, Georgetown University, Department of Economics.
[Downloadable!]
Other versions:
Luca Anderlini (Georgetown University), Dino Gerardi (Yale University), Roger Lagunoff (Georgetown University), .
"The Folk Theorem in Dynastic Repeated Games,"
Working Papers
gueconwpa~04-04-09, Georgetown University, Department of Economics.
[Downloadable!]