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The Social Cost of Cheap Pseudonyms
 Journal of Economics and Management Strategy
, 2000
"... We consider the problems of societal norms for cooperation and reputation when it is possible to obtain "cheap pseudonyms", something which is becoming quite common in a wide variety of interactions on the Internet. This introduces opportunities to misbehave without paying reputational con ..."
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Cited by 270 (11 self)
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We consider the problems of societal norms for cooperation and reputation when it is possible to obtain "cheap pseudonyms", something which is becoming quite common in a wide variety of interactions on the Internet. This introduces opportunities to misbehave without paying reputational consequences. A large degree of cooperation can still emerge, through a convention in which newcomers "pay their dues" by accepting poor treatment from players who have established positive reputations. One might hope for an open society where newcomers are treated well, but there is an inherent social cost in making the spread of reputations optional. We prove that no equilibrium can sustain significantly more cooperation than the duespaying equilibrium in a repeated random matching game with a large number of players in which players have finite lives and the ability to change their identities, and there is a small but nonvanishing probability of mistakes. Although one could remove the ineffici...
Rationality and coherent theories of strategic behavior
, 1999
"... A nonequilibrium model of rational strategic behavior that can be viewed as a refinement of (normal form) rationalizability is developed for both normal form and extensive form games. This solution concept is called a τtheory and is used to analyze the main concerns of the Nash equilibrium refinem ..."
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Cited by 20 (0 self)
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A nonequilibrium model of rational strategic behavior that can be viewed as a refinement of (normal form) rationalizability is developed for both normal form and extensive form games. This solution concept is called a τtheory and is used to analyze the main concerns of the Nash equilibrium refinements literature such as dominance, iterative dominance, extensive form rationality, invariance, and backward induction. The relationship between τtheories and dynamic learning is investigated.
Information Acquisition and Reputation Dynamics
 Review of Economic Studies
, 2011
"... economic and public policy issues. The SIEPR Discussion Paper Series reports on research and policy ..."
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Cited by 8 (1 self)
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economic and public policy issues. The SIEPR Discussion Paper Series reports on research and policy
Evolutionary dynamics with large aggregate shocks
, 2003
"... This paper examines a class of evolutionary models in which large shocks cause frequent movement between shortterm "stable" equilibria. Mutations are rare in our model, but their eects are magnied by a "spread process" which causes a finite proportion of the population to initia ..."
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Cited by 1 (1 self)
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This paper examines a class of evolutionary models in which large shocks cause frequent movement between shortterm "stable" equilibria. Mutations are rare in our model, but their eects are magnied by a "spread process" which causes a finite proportion of the population to initially adopt the entering strategy before the shortterm selection dynamics takes effect. We examine the long run invariant distribution for a variety of games, under several different spread processes: most interestingly, we find that cooperative strategies prevail in the long run in the Finitely Repeated Prisoner's Dilemma game, contrary to the backward induction solution. We also study equilibrium selection in 2x2 and NxN coordination games, establishing conditions under which the riskdominant equilibrium is selected, and demonstrate rapid convergence to the long run invariant distribution.
Finite iterated prisoner’s dilemma revisited: Belief change and endgame effect
 Proceedings of the Behavioral and Quantitative Game Theory (BQGT ’10): Conference on Future Directions, Mary 14–16, 2010
, 2010
"... We develop a novel Bayesian model for the nite Iterated Prisoner's Dilemma that takes into consideration belief change and endgame eect. According to this model, mutual defection is always the Nash equilibrium at any stage of the game, but it is not the only Nash equilibrium under some condit ..."
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Cited by 1 (0 self)
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We develop a novel Bayesian model for the nite Iterated Prisoner's Dilemma that takes into consideration belief change and endgame eect. According to this model, mutual defection is always the Nash equilibrium at any stage of the game, but it is not the only Nash equilibrium under some conditions. The conditions for mutual cooperation to be Nash equilibrium are deduced. It reveals that cooperation can be achieved if both players believe that their opponents are likely to cooperate not only at the current stage but also in future stages. Endgame eect cannot be backward induced in repeated games with uncertainty. We illustrate this by analyzing the unexpected hanging paradox.
An Evolutionary Resolution to the Finitely Repeated Prisoner's Dilemma Paradox
, 2003
"... Argument by backward induction forces us to conclude that two "rational" players will defect on every turn of the Finitely Repeated Prisoner's Dilemma (FRPD) game, thus performing significantly worse than agents with imperfect rationality. When this game is treated from an evolutionar ..."
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Argument by backward induction forces us to conclude that two "rational" players will defect on every turn of the Finitely Repeated Prisoner's Dilemma (FRPD) game, thus performing significantly worse than agents with imperfect rationality. When this game is treated from an evolutionary perspective, using the standard evolutionary model, we encounter a similar paradox: a population which cooperates through turn k can be invaded by a strategy which cooperates through turn k  1, and this process continues until the population is dominated by defectors. However, though the strategy of continual defection is evolutionarily stable, it is inferior to nearly all other FRPD strategies: a bistable equilibrium occurs, in which a very small proportion of the other strategy can take over the population. Thus we propose and defend an alternative evolutionary model, a random invasion model in which "evolutionary dominance" is used instead of Maynard Smith's invasion criteria. This model combines the Lamarckian spread of ideas through a population with Darwinian natural selection of the organisms adopting those ideas, and thus is a more reasonable model of communicating populations. When the new evolutionary model is applied to the Finitely Repeated Prisoner's Dilemma, we find that defectors dominate the population for very short FRPD games, but as game length increases, it becomes more and more certain that successful strategies will cooperate until near the end of the game. Defining rationality based on evolutionary fitness (or fictitious evolutionary play) using this model, we achieve a resolution to the Finitely Repeated Prisoner's Dilemma paradox. Additionally, the model can be generalized and applied to many other decision situations, and thus it serves as a possible standard for rat...