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Signaling Concerns about Fairness: Cooperation under Uncertain Social Preferences

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Author Info

  • John Duffy
  • Felix Munoz-Garcia

    ()
    (School of Economic Sciences, Washington State University)

Abstract

This paper investigates incomplete information and signaling about players?inequity aversion in the simultaneous and sequential-move prisoner?s dilemma game. We first evaluate the role of incomplete information according to: (1) whether uncertainty helps select the effcient equilibrium outcome, and (2) whether more cooperation can be sustained under incomplete than under complete information. We then examine the possibility of information transmission among individuals in a signaling game. A separating equilibrium can be supported in which players with high concerns about fairness bear the cost of cooperating in order to reveal their type to opponents, thus promoting cooperation in subsequent periods. We also fi?nd a pooling equilibrium in which a player unconcerned about inequity aversion initially cooperates in order to mislead the uninformed player. This misleading strategy induces cooperation from the uninformed player in the subsequent stage of the game, moment at which the unconcerned player takes the opportunity to defect. This "backstabbing" equilibrium helps explain frequently observed behavior in ?finitely-repeated experiments.

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File URL: http://faculty.ses.wsu.edu/WorkingPapers/Munoz/WP-2010-19.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2010-19.

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Length: 33 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:wsu:wpaper:munoz-8

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Related research

Keywords: Prisoner?s Dilemma; Inequity aversion; Incomplete Information; Signaling;

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References

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  1. John Duffy & Félix Muñoz-García, 2012. "Patience or Fairness? Analyzing Social Preferences in Repeated Games," Games, MDPI, Open Access Journal, vol. 3(1), pages 56-77, March.
  2. Timothy N Cason & Vai-Lam Mui, 2008. "Coordinating Collective Resistance Through Communication And Repeated Interaction," Development Research Unit Working Paper Series 16/08, Monash University, Department of Economics.
  3. Clark, Kenneth & Sefton, Martin, 2001. "The Sequential Prisoner's Dilemma: Evidence on Reciprocation," Economic Journal, Royal Economic Society, vol. 111(468), pages 51-68, January.
  4. Brandts, J. & Figueras, N., 1997. "An Exploration of Reputation Formation in Experimental Games," UFAE and IAE Working Papers 404.97, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  5. Russell Cooper & Douglas V. DeJong & Thomas W. Ross, 1992. "Cooperation without Reputation: Experimental Evidence from Prisoner's Dilemma Games," Papers 0036, Boston University - Industry Studies Programme.
  6. Bolle, Friedel & Ockenfels, Peter, 1990. "Prisoners' Dilemma as a game with incomplete information," Journal of Economic Psychology, Elsevier, vol. 11(1), pages 69-84, March.
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Cited by:
  1. John Duffy & Felix Munoz-Garcia, 2009. "Patience or Fairness? Analyzing Social Preferences in Repeated Games," Working Papers 2009-12, School of Economic Sciences, Washington State University.

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