Voluntarily Separable Prisoner's Dilemma with Reference Letters
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.
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- "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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"Voluntarily Separable Repeated Prisoner's Dilemma,"
Review of Economic Studies,
Oxford University Press, vol. 76(3), pages 993-1021.
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"Gift Giving and the Evolution of Cooperation,"
Boston College Working Papers in Economics
338., Boston College Department of Economics.
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