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Cooperation in the Finitely Repeated Prisoner's Dilemma (1982)
| Venue: | Journal of Economic Theory |
| Citations: | 388 - 1 self |
BibTeX
@ARTICLE{Kreps82cooperationin,
author = {M. Kreps and Paul Milgrom and John Roberts and Robert Wilson and Row Fink Cooperate},
title = {Cooperation in the Finitely Repeated Prisoner's Dilemma},
journal = {Journal of Economic Theory},
year = {1982},
pages = {245--252}
}
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Abstract
A common observation in experiments involving finite repetition of the prisoners’ dilemma is that players do not always play the single-period dominant strategies (“finking”), but instead achieve some measure of cooperation. Yet finking at each stage is the only Nash equilibrium in the finitely repeated game. We show here how incomplete information about one or both players ’ options, motivation or behavior can explain the observed cooperation. Specifically, we provide a bound on the number of rounds at which Fink may be played, when one player may possibly be committed to a “Tit-for-Tat ” strategy. Journal of Economic Literature Classification Numbers: 026, 213. The purpose of this note is to demonstrate how reputation effects due to informational asymmetries can generate cooperative behavior in finitely repeated versions of the classic prisoners ’ dilemma. The methods employed are those developed in our work on the chain-store paradox (Kreps and Wilson [2], Milgrom and Roberts [4]). We refer the reader to those papers for motivation, formal definitions, and interpretation. The basic game that we consider consists of N repetitions of the following two person. bimatrix, stage game:
Keyphrases
finitely repeated prisoner classic prisoner nash equilibrium player option observed cooperation single-period dominant strategy finite repetition tit-for-tat strategy reputation effect common observation stage game incomplete information informational asymmetry economic literature classification number repeated game cooperative behavior basic game chain-store paradox formal definition repeated version
