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Voluntarily Separable Repeated Prisoner's Dilemma

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  • Takako Fujiwara-Greve

    (Faculty of Economics, Keio University)

  • Masahiro Okuno-Fujiwara

    (Faculty of Economics, University of Tokyo)

Abstract

Ordinary repeated games do not apply to real societies where one can cheat and escape from partners. We formulate a model of endogenous relationships that a player can unilaterally end and start with a randomly-assigned new partner with no information flow. Focusing on two-person, two-action Prisoner's Dilemma, we show that the endogenous duration of partnerships generates a significantly different evolutionary stability structure from ordinary random matching games. Monomorphic equilibria require initial trust-building, while a polymorphic equilibrium includes earlier cooperators than any strategy in monomorphic equilibria and is thus more efficient. This is due to the nonlinearity of average payoffs.Length: 37pages

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Bibliographic Info

Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-599.

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Date of creation: Oct 2008
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Handle: RePEc:tky:fseres:2008cf599

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  1. Kranton, Rachel E, 1996. "Reciprocal Exchange: A Self-Sustaining System," American Economic Review, American Economic Association, vol. 86(4), pages 830-51, September.
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  5. Furusawa, Taiji & Kawakami, Toshikazu, 2008. "Gradual cooperation in the existence of outside options," Journal of Economic Behavior & Organization, Elsevier, vol. 68(2), pages 378-389, November.
  6. Masahiro Okuno-Fujiwara & Takako Fujiwara-Greve & Nobue Suzuki, 2007. ""Social Norms and Voluntary Cooperations"(in Japanese)," CIRJE J-Series CIRJE-J-172, CIRJE, Faculty of Economics, University of Tokyo.
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  8. Rafael Rob & Huanxing Yang, 2006. "Long Term Relationships as Safeguards," Levine's Working Paper Archive 618897000000001039, David K. Levine.
  9. Ellison, Glenn, 1994. "Cooperation in the Prisoner's Dilemma with Anonymous Random Matching," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 567-88, July.
  10. 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.
  11. Watson, Joel, 1999. "Starting Small and Commitment," University of California at San Diego, Economics Working Paper Series qt37p340fc, Department of Economics, UC San Diego.
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  15. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
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Cited by:
  1. Yuki Kumagai, 2009. "Networks and Markets: The dynamic impacts of information, matching and transaction costs on global trade," Discussion Papers 2009-22, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Yuki Kumagai, 2010. "Networks and Markets. The dynamic impacts of information, matching and transaction costs on trade," Discussion Papers 2010-07, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  3. In-Koo Cho & Akihiko Matsui, 2012. "A Dynamic Foundation of the Rawlsian Maxmin Criterion," Dynamic Games and Applications, Springer, vol. 2(1), pages 51-70, March.
  4. Frédéric Schneider & Roberto A. Weber, 2013. "Long-term commitment and cooperation," ECON - Working Papers 130, Department of Economics - University of Zurich.
  5. Filip Vesely & Chun-Lei Yang, 2013. "On Optimal Social Convention in Voluntary Continuation Prisoner's Dilemma Games," CESifo Working Paper Series 4553, CESifo Group Munich.
  6. Takako Fujiwara-Greve & Masahiro Okuno-Fujiwara & Nobue Suzuki, 2010. "Voluntarily Separable Repeated Games with Social Norms," CIRJE F-Series CIRJE-F-715, CIRJE, Faculty of Economics, University of Tokyo.
  7. Takako Fujiwara-Greve & Masahiro Okuno-Fujiwara & Nobue Suzuki, 2008. "Voluntarily Separable Prisoner's Dilemma with Reference Letters," CIRJE F-Series CIRJE-F-551, CIRJE, Faculty of Economics, University of Tokyo.
  8. Cho, In-Koo & Matsui, Akihiko, 2013. "Search theory, competitive equilibrium, and the Nash bargaining solution," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1659-1688.
  9. Akihiko Matsui & In-Koo Cho, 2010. "Aspiration, Sympathy and Minmax Outcome," 2010 Meeting Papers 57, Society for Economic Dynamics.
  10. Fujiwara-Greve, Takako & Okuno-Fujiwara, Masahiro & Suzuki, Nobue, 2012. "Voluntarily separable repeated Prisonerʼs Dilemma with reference letters," Games and Economic Behavior, Elsevier, vol. 74(2), pages 504-516.
  11. Schumacher, Heiner, 2013. "Imitating cooperation and the formation of long-term relationships," Journal of Economic Theory, Elsevier, vol. 148(1), pages 409-417.

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