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Choosing Opponents in Games of Cooperation and Coordination

Author

Listed:
  • Engseld, Peter

    (Department of Economics, Lund University)

  • Bergh, Andreas

    () (Department of Economics, Lund University)

Abstract

We analyze a cooperation game and a coordination game in an evolutionary environment. Agents make noisy observations of opponent's propensity to play dove, called reputation, and form preferences over opponents based on their reputation. A game takes place when two agents agree to play. Socially optimal cooperation is evolutionarily stable when reputation perfectly reflects propensity to cooperate. With some reputation noise, there will be at least some cooperation. Individual concern for reputation results in a seemingly altruistic behavior. The degree of cooperation is decreasing in anonymity. If reputation is noisy enough, there is no cooperation in equilibrium. In the coordination game, the efficient equilibrium is chosen and agents with better skills to observe reputation earn more.

Suggested Citation

  • Engseld, Peter & Bergh, Andreas, 2005. "Choosing Opponents in Games of Cooperation and Coordination," Working Papers 2005:1, Lund University, Department of Economics, revised 29 Nov 2005.
  • Handle: RePEc:hhs:lunewp:2005_001 Note: This paper has been replaced by 2005:45 "Choosing Opponents in Prisoners’ Dilemma: An Evolutionary Analysis"
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    References listed on IDEAS

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    1. Todd L. Cherry & Peter Frykblom & Jason F. Shogren, 2002. "Hardnose the Dictator," American Economic Review, American Economic Association, pages 1218-1221.
    2. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    3. Mary L. Rigdon & Kevin A. McCabe & Vernon L. Smith, 2007. "Sustaining Cooperation in Trust Games," Economic Journal, Royal Economic Society, vol. 117(522), pages 991-1007, July.
    4. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    5. Hoffman, Elizabeth & McCabe, Kevin & Smith, Vernon L, 1996. "Social Distance and Other-Regarding Behavior in Dictator Games," American Economic Review, American Economic Association, vol. 86(3), pages 653-660, June.
    6. Eric Alden Smith & Samuel Bowles & Herbert Gintis, 2000. "Costly Signaling and Cooperation," Working Papers 00-12-071, Santa Fe Institute.
    7. Ernst Fehr & Simon Gaechter, 2003. "Altruistic Punishment in Humans," Microeconomics 0305006, EconWPA.
    8. Ernst Fehr & Urs Fischbacher, 2004. "The nature of human altruism," Experimental 0402003, EconWPA.
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    Cited by:

    1. Bergh, Andreas & Engseld, Peter, 2005. "The Problem of Cooperation and Reputation Based Choice," Working Papers 2005:27, Lund University, Department of Economics, revised 04 May 2006.

    More about this item

    Keywords

    Cooperation; Coordination; Conditioned Strategies; Prisoners Dilemma; Signaling; Reputation; Altruism; Evolutionary Equilibrium;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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