Takako Fujiwara-Greve (Department of Economics, Keio University and Department of Economics, Norwegian School of Management BI) Masahiro Okuno-Fujiwara (Faculty of Economics, University of Tokyo)
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We develop a general framework to analyze endogenous relationships. To consider relationships in the modern society, neither one-shot games nor repeated games are appropriatemodelsbecausethe formationand dissolutionofa relationship is not an option. We formulate voluntarily separable repeated games, in which players are randomly matched t oplay acomponentgameaswellastochoose whether to play the game again with the same partner. There is no information flow across matches, and players are boundedly rational. We extend the notion of Neutrally Stable Distribution (NSD) to fit for our model. When the component game is a prisoner's dilemma, NSD requires some trust-building periods to defect at the beginning of a partnership. We ?nd that polymorphic NSDs with voluntary breakups include strategies with shorter trust-building periods than any monomorphic NSD with no voluntary separation, and hence the average payo? ofpolymorphic NSD is higher.
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number
CIRJE-F-415.
References listed on IDEAS 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.:
Carmichael, H Lorne & MacLeod, W Bentley, 1997.
"Gift Giving and the Evolution of Cooperation,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 485-509, August.
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