Voluntarily Separable Repeated Prisoner's Dilemma with Reference Letters

33 Pages Posted: 15 Aug 2011

See all articles by Takako Fujiwara-Greve

Takako Fujiwara-Greve

Keio University - Faculty of Economics

Masahiro Okuno-Fujiwara

University of Tokyo - Faculty of Economics

Nobue Suzuki

Komazawa University

Date Written: August 15, 2011

Abstract

We consider the voluntarily separable repeated Prisoner's Dilemma model in which players randomly meet and form pairs to repeatedly play Prisoner's Dilemma only by mutual agreement. While the literature has dealt with the case of no information flow across partnerships, we consider the case in which players can issue a "reference letter" to verify at least that the partnership entered the cooperation phase. We show that such reference letters can be voluntarily provided by the partners even at some cost, and that the sheer existence of a letter shortens the trust-building periods and thus improves social efficiency.

Keywords: Voluntary Separation, Prisoner's Dilemma, Information, Random Matching

JEL Classification: C73, D82

Suggested Citation

Fujiwara-Greve, Takako and Okuno-Fujiwara, Masahiro and Suzuki, Nobue, Voluntarily Separable Repeated Prisoner's Dilemma with Reference Letters (August 15, 2011). Available at SSRN: https://ssrn.com/abstract=1909883 or http://dx.doi.org/10.2139/ssrn.1909883

Takako Fujiwara-Greve (Contact Author)

Keio University - Faculty of Economics ( email )

2-15-45 Mita, Ninato-ku
Tokyo 1088345
Japan

Masahiro Okuno-Fujiwara

University of Tokyo - Faculty of Economics ( email )

7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033
Japan

Nobue Suzuki

Komazawa University ( email )

1-23-1 Komazawa
Setagaya-ku
Tokyo, 1548525
Japan

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