Voluntarily separable repeated Prisoner's Dilemma

Takako Fujiwara-Greve, Masahiro Okuno-Fujiwara

Research output: Contribution to journalArticlepeer-review

27 Citations (Scopus)

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 non-linearity of average payoffs.

Original languageEnglish
Pages (from-to)993-1021
Number of pages29
JournalReview of Economic Studies
Volume76
Issue number3
DOIs
Publication statusPublished - 2009

ASJC Scopus subject areas

  • Economics and Econometrics

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