Communication and Community Enforcement

Takuo Sugaya and Alexander Wolitzky

Journal of Political Economy, 2021, vol. 129, issue 9, 2595 - 2628

Abstract: We study the repeated prisoner’s dilemma with random matching, a canonical model of community enforcement with decentralized information. We assume that (1) with small probability, each player is a “bad type” who never cooperates, (2) players observe and remember their partners’ identities, and (3) each player interacts with others frequently but meets any particular partner infrequently. We show that these assumptions preclude cooperation in the absence of explicit communication but that introducing within-match cheap talk communication restores cooperation. Thus, communication is essential for community enforcement.

Date: 2021
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