CIRJE-F-551	"Voluntarily Separable Prisoner's Dilemma with Reference Letters"
Author Name	Fujiwara-Greve, Takako, Masahiro Okuno-Fujiwara and Nobue Suzuki
Date	March 2008
Full Paper	PDF file
Remarks	Title changed as "Voluntarily Separable Repeated Prisoner's Dilemma with Reference Letters" and subsequently published in Games and Economic Behavior, Vol.74, Issue 2, March 2012, pp.504-516.

Abstract

We consider voluntarily separable repeated Prisoner's Dilemma in which a pair of players meet randomly and repeatedly play Prisoner's Dilemma only by mutual agreement. Fujiwara-Greve and Okuno-Fujiwara (2007) consider the case that once a partnership is dissolved there is no information flow to other partnerships. We consider the case that players can issue a reference letter to the partner if they entered cooperation periods, but the content of a letter is not verifiable. We show that the sheer existence of a letter shortens the trust-building periods of new matches and thus improves efficiency in equilibrium.