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Full-Text Articles in Social and Behavioral Sciences
Cooperation In A Repeated Prisoner's Dilemma With Ostracism, Eric Bennett Rasmusen, David Hirshleifer
Cooperation In A Repeated Prisoner's Dilemma With Ostracism, Eric Bennett Rasmusen, David Hirshleifer
Eric Bennett Rasmusen
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 …
Product Quality With Information Dissemination And Switching Costs, Eric Bennett Rasmusen
Product Quality With Information Dissemination And Switching Costs, Eric Bennett Rasmusen
Eric Bennett Rasmusen
Klein and Leffler (1981) construct a model in which expected future prices exceed marginal costs so that sellers are willing to maintain high quality for the sake of future profits. How profits are dissapated under free entry, and whether there is a continuum of equilibria, are questions not fully resolved. I contstruct a formal model simpler than any now existing in which free entry and exogenous fixed costs uniquely determine the price of output and the amount sold per firm.