We analyze a cooperation game and a coordination game in an evolutionary environment. Agents make noisy observations of opponent's propensity to play dove, called reputation, and form preferences over opponents based on their reputation. A game takes place when two agents agree to play. Socially optimal cooperation is evolutionarily stable when reputation perfectly reflects propensity to cooperate. With some reputation noise, there will be at least some cooperation. Individual concern for reputation results in a seemingly altruistic behavior. The degree of cooperation is decreasing in anonymity. If reputation is noisy enough, there is no cooperation in equilibrium. In the coordination game, the efficient equilibrium is chosen and agents with better skills to observe reputation earn more.
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Paper provided by Lund University, Department of Economics in its series Working Papers with number
2005:1.
Length: 25 pages Date of creation: 04 Jan 2005 Date of revision:
03 May 2005 Handle: RePEc:hhs:lunewp:2005_001
Note: This paper has been replaced by 2005:45 "Choosing Opponents in Prisoners’ Dilemma: An Evolutionary Analysis" Contact details of provider: Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden Phone: +46 +46 222 0000 Fax: +46 +46 2224613 Web page: http://www.nek.lu.se/ More information through EDIRC
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Find related papers by JEL classification: C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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Rigdon, Mary & McCabe, Kevin & Smith, Vernon, 2001.
"Sustaining cooperation in trust games,"
MPRA Paper
2006, University Library of Munich, Germany, revised 23 Apr 2006.
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Other versions:
Todd L. Cherry & Peter Frykblom & Jason F. Shogren, 2002.
"Hardnose the Dictator,"
American Economic Review,
American Economic Association, vol. 92(4), pages 1218-1221, September.
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Todd L. Cherry & Peter Frykblom & Jason F. Shogren, 2002.
"Hardnose the Dictator,"
Working Papers
02-06, Department of Economics, Appalachian State University.
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