Acquired Cooperation in Finite-Horizon Games

23 Pages Posted: 19 Apr 2003

See all articles by Igal Milchtaich

Igal Milchtaich

Bar-Ilan University - Department of Economics

Avi Weiss

Bar-Ilan University - Department of Economics; Taub Center for Social Policy Studies in Israel; IZA Institute of Labor Economics

Date Written: December 2002

Abstract

When a prisoner's dilemma-like game is repeated any finite number of times, the only equilibrium outcome is the one in which all players defect in all periods. However, if cooperation among the players changes their perception of the game by making defection increasingly less attractive, then players may be willing to cooperate in late periods in which unilateral defection has become unprofitable. In this case, cooperation may also be attainable in the first period, since defection then can effectively be punished by cessation of cooperation by all the other players. In this paper, we explore this possibility, and consider conditions guaranteeing the players' willingness to cooperate also in the middle periods, in which defection is more profitable than later on, and, at the same time, punishments are less effective than at the beginning. These conditions are sufficient for the existence of an equilibrium in which players cooperate in all periods.

Keywords: Cooperation, altruism, game theory, finitely repeated games, dynamic games

JEL Classification: C72, C73

Suggested Citation

Milchtaich, Igal and Weiss, Avi, Acquired Cooperation in Finite-Horizon Games (December 2002). Available at SSRN: https://ssrn.com/abstract=387420 or http://dx.doi.org/10.2139/ssrn.387420

Igal Milchtaich

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel

Avi Weiss (Contact Author)

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
+972 3 531 8934 (Phone)
+972 3 535 3180 (Fax)

Taub Center for Social Policy Studies in Israel ( email )

15 Ha'ari Street
Jerusalem
Israel

HOME PAGE: http://taubcenter.org.il/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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