Plausible cooperation

Olivier Compte and Andrew Postlewaite

Games and Economic Behavior, 2015, vol. 91, issue C, 45-59

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)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Plausible cooperation (2015)
Working Paper: Plausible cooperation (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:91:y:2015:i:c:p:45-59

DOI: 10.1016/j.geb.2015.03.010

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