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Voluntarily separable repeated Prisonerʼs Dilemma with reference letters

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

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.

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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 74 (2012)
Issue (Month): 2 ()
Pages: 504-516

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Handle: RePEc:eee:gamebe:v:74:y:2012:i:2:p:504-516
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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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.
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  9. Parikshit Ghosh & Debraj Ray, 1995. "Cooperation in Community Interaction Without Information Flows," Boston University - Institute for Economic Development 64, Boston University, Institute for Economic Development.
  10. "Okuno-Fujiwara, Masahiro" & "Fujiwara-Greve, Takako" & "Suzuki, Nobue", 2007. "Social Norms and Voluntary Cooperation," Economic Review, Hitotsubashi University, vol. 58(2), pages 110-121, April.
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