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Voluntarily Separable Repeated Prisoner's Dilemma

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  • Takako Fujiwara-Greve

    (Faculty of Economics, Keio University)

  • Masahiro Okuno-Fujiwara

    (Faculty of Economics, University of Tokyo)

Abstract

Ordinary repeated games do not apply to real societies where one can cheat and escape from partners. We formulate a model of endogenous relationships that a player can unilaterally end and start with a randomly-assigned new partner with no information flow. Focusing on two-person, two-action Prisoner's Dilemma, we show that the endogenous duration of partnerships generates a significantly different evolutionary stability structure from ordinary random matching games. Monomorphic equilibria require initial trust-building, while a polymorphic equilibrium includes earlier cooperators than any strategy in monomorphic equilibria and is thus more efficient. This is due to the nonlinearity of average payoffs.Length: 37pages

Suggested Citation

  • Takako Fujiwara-Greve & Masahiro Okuno-Fujiwara, 2008. "Voluntarily Separable Repeated Prisoner's Dilemma," CIRJE F-Series CIRJE-F-599, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2008cf599
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