Gradual cooperation in the existence of outside options

B-Tier
Journal: Journal of Economic Behavior and Organization
Year: 2008
Volume: 68
Issue: 2
Pages: 378-389

Authors (2)

Furusawa, Taiji (University of Tokyo) Kawakami, Toshikazu (not in RePEc)

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

The paper shows that efficient cooperation processes exhibit gradualism when each player does not know the likelihood that the other player exercises a stochastically available outside option. Two players, asymmetrically informed on this likelihood, play an infinitely repeated prisoner's dilemma game. Each player is either the high type with the high probability to obtain the outside option or the low type. As time proceeds with neither player exercising the outside option, each player puts more probability on the belief that his partner is the low type, enabling the players to raise cooperation levels in the efficient pooling equilibrium.

Technical Details

RePEc Handle
repec:eee:jeborg:v:68:y:2008:i:2:p:378-389
Journal Field
Theory
Author Count
2
Added to Database
2026-01-25