Organizations and overlapping generations games: Memory, communication, and altruism
This paper studies the role of memory and communication in overlapping generations (OLG) games between ongoing organizations. In each organization, each individual, upon entry into the game, replaces his predecessor who has the same preferences and faces the same strategic possibilities. An individual has no prior memory - that is, he does not directly witness the events that occur before his tenure. Instead, each individual relies on information about the past from his predecessor via cheap talk. This paper highlights the role of communication as a surrogate for memory. It has been shown elsewhere that Folk Theorems hold in OLG games with long enough lived individuals who can perfectly observe the past. However, the Folk Theorem fails for many games when individuals have no prior memory. We show that for OLG games without prior memory but with costly communication, a Folk Theorem holds only when there is some altruistic link between cohorts in an organization. Our main result asserts that if communication costs are sufficiently small, or if altruistic weights on successors are sufficiently large, then a strongly stationary Folk Theorem (i.e., equilibrium payoffs are time invariant) obtains if a manager’s message is public information. The equilibria in this Folk Theorem require a special form of intergenerational sanctions. In these sanctions, punishment is sometimes carried out long after both victim and perpetrator have left the game. Without this special structure, altruism may in fact destroy cooperation when it would otherwise be possible. Copyright Springer-Verlag Berlin/Heidelberg 2004
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 8 (2004)
Issue (Month): 4 (04)
|Contact details of provider:|| Web page: http://link.springer.de/link/service/journals/10058/index.htm|
|Order Information:||Web: http://link.springer.de/orders.htm|
When requesting a correction, please mention this item's handle: RePEc:spr:reecde:v:8:y:2004:i:4:p:383-411. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Christopher F Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.