Demented Prisoners

Klaus Kultti () and Hannu Salonen
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Hannu Salonen: Department of Economics, University of Turku

No 43, Discussion Papers from Aboa Centre for Economics

Abstract: We study infinitely repeated Prisoners' Dilemma, where one of the players may be demented. If a player gets demented in period t after his choice of action, he is stuck to this choice for the rest of the game. So if his last choice was ``cooperate'' just before dementia struck him, then he's bound to cooperate always in the future. Even though a demented player cannot make choices any more he enjoys the same payoffs from strategy profiles as he did when healthy. A player may prove he is still healthy by showing a (costly) health certificate. This is possible only as long as the player really is healthy: a demented player cannot get a clean bill of health. We study an asymmetric information game where it is known that player 1 cannot get demented but player 2 may be either a ``healthy'' type who will never be demented or a ``dementible'' type who eventually will get demented. We study when cooperation can be maintained in a perfect Bayesian equilibrium with at most health check.

Keywords: prisoners' dilemma; dementia; co-operation (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Pages: 17
Date: 2009-02
New Economics Papers: this item is included in nep-cdm, nep-evo, nep-gth and nep-hpe
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