Cooperation by Indirect Revelation Through Strategic Behavior

Robert Lapson

No 1036, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

Abstract: The paper deals with a one-shot prisoners' dilemma when the players have an option to go to court but cannot verify their testimonies. To solve the problem a second stage is added to a game. At the first stage the players are involved in the prisoners' dilemma and at the second stage they play another game in which their actions are verifiable. In such a setup the information about the actions chosen at the prisoners' dilemma stage can be revealed through strategic behavior of the players during the second stage. A mechanism for such revelation in the extended game is described. It provides an existence of a unique sequential equilibrium, which may be obtained by an interative elimination of dominated strategies and has a number of desirable properties.

Date: 1993-03
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