On Mar 9, 2007, PED Seminar Series Presents
Community Enforcement when Players Observe Partners' Past Play
by Satoru Takahashi
I investigate whether a community can sustain cooperation in the repeated prisoner's dilemma
by having cheaters sanctioned not by their victims but by third parties. Motivated by systems
of credit history recording, online feedback systems, and some experimental settings, I assume
that players can access information about their partners' past play for free, but that acquiring
information about their partners' past partners' past play is prohibitively costly. In this
setting, even though players cannot distinguish cheaters from those who punish cheaters, I show
that any level of cooperation can be sustained by an equilibrium.
The equilibrium I construct has
the following two properties: every player chooses his actions independently of his own record of
play, and he is indifferent between cooperation and defection at all histories. This equilibrium
carries over to the finite-population setting and is robust to noise in the process of choosing
actions or of recording past play. The technique of equilibrium construction is applied to more
general stage games. I also analyze the possibility of cooperation either when players are required
to have strict incentives to follow equilibrium strategies or when only summary statistics of
records are stored in the community.
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