American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Negotiating Cooperation under Uncertainty: Communication in Noisy, Indefinitely Repeated Interactions
American Economic Journal: Microeconomics
vol. 16,
no. 3, August 2024
(pp. 232–58)
Abstract
Case studies of cartels and recent theory suggest that communication is a key factor for cooperation under imperfect monitoring, where actions can only be observed with noise. We conduct a laboratory experiment to study how communication affects cooperation under different monitoring structures. Pre-play communication reduces strategic uncertainty and facilitates very high cooperation rates at the beginning of an interaction. Under perfect monitoring, this is sufficient to reach a high and stable cooperation rate. However, repeated communication is important to maintain a high level of cooperation under imperfect monitoring, where players face additional uncertainty about the history of play.Citation
Dvorak, Fabian, and Sebastian Fehrler. 2024. "Negotiating Cooperation under Uncertainty: Communication in Noisy, Indefinitely Repeated Interactions." American Economic Journal: Microeconomics, 16 (3): 232–58. DOI: 10.1257/mic.20210117Additional Materials
JEL Classification
- C72 Noncooperative Games
- C73 Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
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