Review of Economic Studies Vol. 76 No. 3 2009
Voluntarily Separable Repeated Prisoner's Dilemma
Abstract
Ordinary repeated games do not apply to real societies where one can cheat and escape from partners. We formulate a model of endogenous relationships that a player can unilaterally end and start with a randomly assigned new partner with no information flow. Focusing on two-person, two-action Prisoner's Dilemma, we show that the endogenous duration of partnerships generates a significantly different evolutionary stability structure from ordinary random matching games. Monomorphic equilibria require initial trust building, while a polymorphic equilibrium includes earlier cooperators than any strategy in monomorphic equilibria and is thus more efficient. This is due to the non-linearity of average payoffs.
- DOI
- 10.1111/j.1467-937x.2009.00539.x
- Volume
- 76
- Issue
- 3
- Pages
- 993-1021
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref