The analogical foundations of cooperation

Philippe Jehiel () and Larry Samuelson

Journal of Economic Theory, 2023, vol. 208, issue C

Abstract: We offer an approach to cooperation in repeated games of private monitoring in which players construct models of their opponents' behavior by observing the frequencies of play in a record of past plays of the game in which actions but not signals are recorded. Players construct models of their opponent's behavior by grouping the histories in the record into a relatively small number of analogy classes for which they estimate probabilities of cooperation. The incomplete record and the limited number of analogy classes lead to misspecified models that provide the incentives to cooperate. We provide conditions for the existence of equilibria supporting cooperation and equilibria supporting high payoffs for some nontrivial analogy partitions.

Keywords: Analogical reasoning; Cooperation; Prisoners' dilemma; Repeated game; Private monitoring (search for similar items in EconPapers)
JEL-codes: C70 C72 C73 (search for similar items in EconPapers)
Date: 2023
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Related works:
Working Paper: The analogical foundations of cooperation (2023)
Working Paper: The analogical foundations of cooperation (2023)
Working Paper: The Analogical Foundations of Cooperation (2022)
Working Paper: The Analogical Foundations of Cooperation (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:208:y:2023:i:c:s0022053123000054

DOI: 10.1016/j.jet.2023.105609

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