Trust is bound to emerge (In the repeated Trust Game)

Luciano Andreozzi

No 1008, Department of Economics Working Papers from Department of Economics, University of Trento, Italia

Abstract: This paper addresses the emergence of cooperation in asymmetric pris- oners' dilemmas in which one player chooses after having observed the other player's choice (Trust Game). We use the finite automata approach with complexity costs to study the equilibria of the repeated version of this game. We show that there is a small set of automata that form the unique Closed Under Rational Behavior (CURB) set for this game. This set contains two non-strict Nash equilibria, a cooperative and a non- cooperative one. We show that the cooperative equilibrium is the only (cyclically) stable set under the so called Best Response Dynamics.

JEL-codes: C70 C72 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-evo, nep-gth and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:trn:utwpde:1008

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