Cooperation in a Repeated Prisoners' Dilemma with Ostracism

Posted: 1 Dec 2008

See all articles by Eric Bennett Rasmusen

Eric Bennett Rasmusen

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

David A. Hirshleifer

University of California, Irvine - Paul Merage School of Business; NBER

Abstract

The unique Nash equilibrium of the finitely repeated n-person Prisoners' Dilemma calls for defection in all rounds. One way to enforce cooperation in groups is ostracism: players who defect are expelled. If the group's members prefer not to diminish its size, ostracism hurts the legitimate members of the group as well as the outcast, putting the credibility of the threat in doubt. Nonetheless, we show that ostracism can be effective in promoting cooperation with either finite or infinite rounds of play. The model can be applied to games other than the Prisoners' Dilemma, and ostracism can enforce inefficient as well as efficient outcomes.

Suggested Citation

Rasmusen, Eric Bennett and Hirshleifer, David A., Cooperation in a Repeated Prisoners' Dilemma with Ostracism. Journal of Economic Behavior and Organization, Vol. 12, No. 1, pp. 87-106, August 1989. Available at SSRN: https://ssrn.com/abstract=1279700

Eric Bennett Rasmusen

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

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HOME PAGE: http://rasmusen.org

David A. Hirshleifer (Contact Author)

University of California, Irvine - Paul Merage School of Business ( email )

Irvine, CA California 92697-3125
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HOME PAGE: http://sites.uci.edu/dhirshle/

NBER ( email )

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