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Voluntarily separable repeated Prisonerʼs Dilemma with reference letters

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  • Fujiwara-Greve, Takako
  • Okuno-Fujiwara, Masahiro
  • Suzuki, Nobue

Abstract

We consider the voluntarily separable repeated Prisonerʼs Dilemma model in which players randomly meet and form pairs to repeatedly play Prisonerʼs Dilemma only by mutual agreement. While the literature has dealt with the case of no information flow across partnerships, we consider the case in which players can issue a “reference letter” to verify at least that the partnership entered the cooperation phase. We show that such reference letters can be voluntarily provided by the partners even at some cost, and that the sheer existence of a letter shortens the trust-building periods and thus improves social efficiency.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:gamebe:v:74:y:2012:i:2:p:504-516
    DOI: 10.1016/j.geb.2011.08.019
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    More about this item

    Keywords

    Voluntary separation; Prisonerʼs Dilemma; Cooperation; Information; Random matching;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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