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Voluntarily separable repeated Prisonerʼs Dilemma with reference letters

Takako Fujiwara-Greve (), Masahiro Okuno-Fujiwara () and Nobue Suzuki

Games and Economic Behavior, 2012, vol. 74, issue 2, 504-516

Abstract: We consider the voluntarily separable repeated Prisonerʼs Dilemma model in which players randomly meet and form pairs to repeatedly play Prisonerʼs Dilemma only by mutual agreement. While the literature has dealt with the case of no information flow across partnerships, we consider the case in which players can issue a “reference letter” to verify at least that the partnership entered the cooperation phase. We show that such reference letters can be voluntarily provided by the partners even at some cost, and that the sheer existence of a letter shortens the trust-building periods and thus improves social efficiency.

Keywords: Voluntary separation; Prisonerʼs Dilemma; Cooperation; Information; Random matching (search for similar items in EconPapers)
JEL-codes: C73 D82 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1016/j.geb.2011.08.019

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