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Voluntarily Separable Prisoner's Dilemma with Reference Letters

Author

Listed:
  • Takako Fujiwara-Greve

    (Department of Economics, Keio University)

  • Masahiro Okuno-Fujiwara

    (Faculty of Economics, University of Tokyo)

  • Nobue Suzuki

    (Department of Economics, Komazawa University)

Abstract

We consider voluntarily separable repeated Prisoner's Dilemma in which a pair of players meet randomly and repeatedly play Prisoner's Dilemma only by mutual agreement. Fujiwara-Greve and Okuno-Fujiwara (2007) consider the case that once a partnership is dissolved there is no information flow to other partnerships. We consider the case that players can issue a reference letter to the partner if they entered cooperation periods, but the content of a letter is not verifiable. We show that the sheer existence of a letter shortens the trust-building periods of new matches and thus improves efficiency in equilibrium.

Suggested Citation

  • Takako Fujiwara-Greve & Masahiro Okuno-Fujiwara & Nobue Suzuki, 2008. "Voluntarily Separable Prisoner's Dilemma with Reference Letters," CIRJE F-Series CIRJE-F-551, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2008cf551
    as

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    References listed on IDEAS

    as
    1. Glenn Ellison, 1994. "Cooperation in the Prisoner's Dilemma with Anonymous Random Matching," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 567-588.
    2. Carmichael, H Lorne & MacLeod, W Bentley, 1997. "Gift Giving and the Evolution of Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(3), pages 485-509, August.
    3. Kranton, Rachel E, 1996. "Reciprocal Exchange: A Self-Sustaining System," American Economic Review, American Economic Association, vol. 86(4), pages 830-851, September.
    4. 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.
    5. Takako Fujiwara-Greve & Masahiro Okuno-Fujiwara, 2009. "Voluntarily Separable Repeated Prisoner's Dilemma," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(3), pages 993-1021.
    6. Michihiro Kandori, 1992. "Social Norms and Community Enforcement," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(1), pages 63-80.
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