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On Optimal Social Convention in Voluntary Continuation Prisoner's Dilemma Games

Author

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  • Filip Vesely
  • Chun-Lei Yang

Abstract

When the repeated prisoner’s dilemma setup is generalized to allow for a unilateral breakup, maximal efficiency in equilibrium remains an open question. With restrictions of simple symmetry with eternal mutual cooperation, defection, or (matched) alternation on the equilibrium path, we describe the upper limit of discounted lifetime payoff and construct simple social conventions that, for a large set of parameters, achieve it. While all other well-known equilibrium designs in the literature punish defections with a breakup and thus reach the optimum only in degenerate cases, exploited cooperators in ours allow defectors to compensate them by cooperating more in the future.

Suggested Citation

  • Filip Vesely & Chun-Lei Yang, 2013. "On Optimal Social Convention in Voluntary Continuation Prisoner's Dilemma Games," CESifo Working Paper Series 4553, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_4553
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp4553.pdf
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    References listed on IDEAS

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    Cited by:

    1. Takako Fujiwara-Greve & Masahiro Okuno-Fujiwara & Nobue Suzuki, 2015. "Efficiency may improve when defectors exist," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 60(3), pages 423-460, November.
    2. Qu, Xinglong & Zhou, Changli & Cao, Zhigang & Yang, Xiaoguang, 2016. "Conditional dissociation as a punishment mechanism in the evolution of cooperation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 449(C), pages 215-223.

    More about this item

    Keywords

    voluntary continuation; repeated prisoner’s dilemma; social convention; moral maxim; finite automation; eternal cooperation; eternal alternation;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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