Cooperative equilibria in the finite iterated prisoner's dilemma

Kae Nemoto and Michael Gagen ()
Additional contact information
Kae Nemoto: National Institute of Informatics, Japan

Game Theory and Information from University Library of Munich, Germany

Abstract: Nash equilibria are defined using uncorrelated behavioural or mixed joint probability distributions effectively assuming that players of bounded rationality must discard information to locate equilibria. We propose instead that rational players will use all the information available in correlated distributions to constrain payoff function topologies and gradients to generate novel 'constrained' equilibria, each one a backwards induction pathway optimizing payoffs in the constrained space. In the finite iterated prisoner's dilemma, we locate constrained equilibria maximizing payoffs via cooperation additional to the unconstrained (Nash) equilibrium maximizing payoffs via defection. Our approach clarifies the usual assumptions hidden in backwards induction.

Keywords: finite iterated prisoner's dilemma; Nash equilibria; constrained optimization; backwards induction; expected payoff ensemble (search for similar items in EconPapers)
JEL-codes: C61 C72 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2004-04-12
Note: Type of Document - pdf; pages: 15
References: Add references at CitEc
Citations:

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/game/papers/0404/0404001.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpga:0404001

Access Statistics for this paper

More papers in Game Theory and Information from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ( this e-mail address is bad, please contact ).