Seemingly Unrelated Repeated Games
AbstractSuppose Player A is playing two apparently independent repeated games with two other people, B and C, with A randomly matched, each period, with either B or C. Each dyad maintains the maximum incentive-compatible level of cooperation within the dyad, even if cooperation has broken down in the other dyad. Thus, if A defects against B, say, then C is still willing to cooperate with A to the maximum incentive-compatible degree. Nevertheless, we show that the simple presence of each cooperative relationship can increase the maximum incentive compatible level of cooperation in the other dyad, due to a counterintuitive circular reasoning or “bootstrapping” effect. With more than two relationships, bootstrapping effects alternate with equally counterintuitive reverse bootstrapping effects.
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Bibliographic InfoPaper provided by EconWPA in its series Game Theory and Information with number 0511004.
Length: 28 pages
Date of creation: 10 Nov 2005
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Repeated Games; Random Matching;
Find related papers by JEL classification:
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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