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Voluntarily Separable Prisoner's Dilemma with Reference Letters

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Author Info
Takako Fujiwara-Greve (Department of Economics, Keio University)
Masahiro Okuno-Fujiwara (Faculty of Economics, University of Tokyo)
Nobue Suzuki (Department of Economics, Komazawa University)

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Abstract

We consider voluntarily separable repeated Prisoner's Dilemma in which a pair of players meet randomly and repeatedly play Prisoner's Dilemma only by mutual agreement. Fujiwara-Greve and Okuno-Fujiwara (2007) consider the case that once a partnership is dissolved there is no information flow to other partnerships. We consider the case that players can issue a reference letter to the partner if they entered cooperation periods, but the content of a letter is not verifiable. We show that the sheer existence of a letter shortens the trust-building periods of new matches and thus improves efficiency in equilibrium.

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File URL: http://www.e.u-tokyo.ac.jp/cirje/research/dp/2008/2008cf551.pdf
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-551.

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Length: 17 pages
Date of creation: Mar 2008
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Handle: RePEc:tky:fseres:2008cf551

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  1. Gibbons, Robert & Katz, Lawrence F, 1991. "Layoffs and Lemons," Journal of Labor Economics, University of Chicago Press, vol. 9(4), pages 351-80, October. [Downloadable!] (restricted)
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  2. Kandori, Michihiro, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 63-80, January. [Downloadable!] (restricted)
  3. Takako Fujiwara-Greve & Masahiro Okuno-Fujiwara, 2008. "Voluntarily Separable Repeated Prisoner's Dilemma," CIRJE F-Series CIRJE-F-599, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
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  4. Ellison, Glenn, 1994. "Cooperation in the Prisoner's Dilemma with Anonymous Random Matching," Review of Economic Studies, Blackwell Publishing, vol. 61(3), pages 567-88, July. [Downloadable!] (restricted)
  5. Saikat Datta, 1996. "Building Trust," STICERD - Theoretical Economics Paper Series 305, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  6. Ghosh, Parikshit & Ray, Debraj, 1996. "Cooperation in Community Interaction without Information Flows," Review of Economic Studies, Blackwell Publishing, vol. 63(3), pages 491-519, July. [Downloadable!] (restricted)
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  7. H. Lorne Carmichael & W. Bentley MacLeod, 1997. "Gift Giving and the Evolution of Cooperation," Boston College Working Papers in Economics 338., Boston College Department of Economics. [Downloadable!]
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