Plausible Cooperation, Fourth Version

Oliver Compte () and Andrew Postlewaite
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Oliver Compte: Paris School of Economics

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: There is a large repeated games literature illustrating how future interactions provide incentives for cooperation. Much of the earlier literature assumes public monitoring. Departures from public monitoring to private monitoring that incorporate differences in players’ observations may dramatically complicate coordination and the provision of incentives, with the consequence that equilibria with private monitoring often seem unrealistically complex or fragile. We set out a model in which players accomplish cooperation in an intuitively plausible fashion. Players process information via a mental system — a set of psychological states and a transition function between states depending on observations. Players restrict attention to a relatively small set of simple strategies, and consequently, might learn which perform well.

Keywords: : repeated games; private monitoring; bounded rationality; cooperation (search for similar items in EconPapers)
JEL-codes: D01 D70 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2010-12-01, Revised 2015-01-23
New Economics Papers: this item is included in nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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