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Voluntarily Separable Repeated Prisoner's Dilemma

  • Takako Fujiwara-Greve

    (Faculty of Economics, Keio University)

  • Masahiro Okuno-Fujiwara

    (Faculty of Economics, University of Tokyo)

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

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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-599.

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Date of creation: Oct 2008
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Handle: RePEc:tky:fseres:2008cf599
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  1. 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.
  2. Dilip Abreu & Rajiv Sethi, 2001. "Evolutionary Stability in a Reputational Model of Bargaining," Game Theory and Information 0103001, EconWPA.
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  5. Rafael Rob & Huanxing Yang, 2006. "Long Term Relationships as Safeguards," Levine's Working Paper Archive 618897000000001039, David K. Levine.
  6. Okuno-Fujiwara, Masahiro, 1987. "Monitoring cost, agency relationships, and equilibrium modes of labor contracts," Journal of the Japanese and International Economies, Elsevier, vol. 1(2), pages 147-167, June.
  7. Kranton, Rachel E, 1996. "Reciprocal Exchange: A Self-Sustaining System," American Economic Review, American Economic Association, vol. 86(4), pages 830-51, September.
  8. Ellison, Glenn, 1994. "Cooperation in the Prisoner's Dilemma with Anonymous Random Matching," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 567-88, July.
  9. Kranton, Rachel E, 1996. "The Formation of Cooperative Relationships," Journal of Law, Economics and Organization, Oxford University Press, vol. 12(1), pages 214-33, April.
  10. Furusawa, Taiji & Kawakami, Toshikazu, 2008. "Gradual cooperation in the existence of outside options," Journal of Economic Behavior & Organization, Elsevier, vol. 68(2), pages 378-389, November.
  11. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  12. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
  13. Watson, Joel, 2002. "Starting Small and Commitment," Games and Economic Behavior, Elsevier, vol. 38(1), pages 176-199, January.
  14. Masahiro Okuno-Fujiwara & Takako Fujiwara-Greve & Nobue Suzuki, 2007. ""Social Norms and Voluntary Cooperations"(in Japanese)," CIRJE J-Series CIRJE-J-172, CIRJE, Faculty of Economics, University of Tokyo.
  15. Kandori, Michihiro, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Wiley Blackwell, vol. 59(1), pages 63-80, January.
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