A Prisoners' Dilemma with Incomplete Information on the Discount Factors

Elena Parilina () and Alessandro Tampieri

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: This paper analyses a prisoners'dilemma where players' discount factor is private information. We consider an infinitely repeated game where two states of the world may occur. According to her own discount factor, a player chooses a cooperative behaviour in both states (patient), in none of the states (impatient) or in one state only (mildly patient). The presence of different states of the world affects the strategic role of beliefs. A mildly patient player has an incentive in pretending to be patient, which increases with the competitor's belief that the player is patient. nterestingly, this effect prevents or delays cooperative equilibria to occur when the belief in patience is strong.

Keywords: Bayesian games; two-phases game; Markov perfect equilibrium (search for similar items in EconPapers)
JEL-codes: C73 D43 L13 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2018
New Economics Papers: this item is included in nep-gth and nep-mic
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