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Observations on Cooperation

Heller, Yuval and Mohlin, Erik (2015): Observations on Cooperation.

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We study environments in which agents are randomly matched to play a Prisoner's Dilemma, and each player observes a few of the partner's past actions against previous opponents. We depart from the existing literature in two key respects: (1) we allow a small fraction of the population to be commitment types, and (2) we do not assume a time zero at which the entire community starts to interact. The presence of committed agents destabilizes all previously proposed mechanisms for sustaining cooperation. We present a novel mechanism (involving an essentially unique strategy combination) that sustains stable cooperation in many environments.

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