Signaling Concerns about Fairness: Cooperation under Uncertain Social Preferences

John Duffy and Felix Munoz-Garcia

No 2010-19, Working Papers from School of Economic Sciences, Washington State University

Abstract: This paper investigates incomplete information and signaling about players?inequity aversion in the simultaneous and sequential-move prisoner?s dilemma game. We first evaluate the role of incomplete information according to: (1) whether uncertainty helps select the effcient equilibrium outcome, and (2) whether more cooperation can be sustained under incomplete than under complete information. We then examine the possibility of information transmission among individuals in a signaling game. A separating equilibrium can be supported in which players with high concerns about fairness bear the cost of cooperating in order to reveal their type to opponents, thus promoting cooperation in subsequent periods. We also fi?nd a pooling equilibrium in which a player unconcerned about inequity aversion initially cooperates in order to mislead the uninformed player. This misleading strategy induces cooperation from the uninformed player in the subsequent stage of the game, moment at which the unconcerned player takes the opportunity to defect. This "backstabbing" equilibrium helps explain frequently observed behavior in ?finitely-repeated experiments.

Keywords: Prisoner?s Dilemma; Inequity aversion; Incomplete Information; Signaling (search for similar items in EconPapers)
JEL-codes: C72 C73 D82 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2010-12
New Economics Papers: this item is included in nep-cbe, nep-cta, nep-exp, nep-gth and nep-hpe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://faculty.ses.wsu.edu/WorkingPapers/Munoz/WP-2010-19.pdf First version, 2010 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (http://faculty.ses.wsu.edu/WorkingPapers/Munoz/WP-2010-19.pdf [307 Temporary Redirect]--> https://ses.wsu.edu/faculty/)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsu:wpaper:munoz-8

Access Statistics for this paper

More papers in Working Papers from School of Economic Sciences, Washington State University Contact information at EDIRC.
Bibliographic data for series maintained by Danielle Engelhardt ().