Cooperation in Community Interaction without Information Flows

Ghosh, Parikshit; Ray, Debraj

doi:10.2307/2297892

Cited by 250 publications

(216 citation statements)

References 3 publications

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“…Finally, optimal non-stationary contracts in our framework and, especially their shape over the growing phase, also shares features found in the reputation literature (Sobel 1985, Ghosh and Ray 1996, Watson 1999. Relationships might start "small" there to ease reputations building when there is uncertainty on traders' opportunism.…”

Section: Literature Reviewsupporting

confidence: 63%

A Theory of Contracts with Limited Enforcement

Martimort

Semenov

Stole

2016

Review of Economic Studies

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Abstract. We present a Theory of Contracts under costly enforcement in the context of a dynamic relationship between an uninformed buyer and a seller who is privately informed on his persistent cost at the outset. Public enforcement relies on remedies for breach. Private enforcement comes from severing relationships. We first characterize aggregate enforcement constraints ensuring that trading partners do not breach contracts unduly. Whether a longterm contract is enforceable does not depend on the distribution of penalties for breach between the buyer and the seller. While under complete information, the optimal contract would remain stationary, non-stationarity might arise under asymmetric information. Enforcement constraints are time-dependent and easier to satisfy as time passes. Indeed, a high-cost seller may be tempted to trade high volumes at high prices at the beginning of the relationship before breaching the contract later on. Yet, such take-the-money-and-run strategy becomes less attractive as time passes and can be prevented with backloaded payments. The optimal contract thus goes through two different phases. First, quantities and prices increase at the inception of the relationship. Later on, the contract looks more stationary. The public and private sides of enforcement plays different roles in determining the length of the earlier phase of contracting. Long-run screening distortions encapsulate the quality of enforcement, offering de facto a link between the quality of the legal system and contractual performances.

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Section: Literature Reviewsupporting

confidence: 63%

A Theory of Contracts with Limited Enforcement

Martimort

Semenov

Stole

2016

Review of Economic Studies

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“…Rob and 1 See also Watson (1999) who studies mutual investment with uncertainty over types. Yang (2003) and Ghosh and Ray (1996) examine endogenous formation of long term relationships where partners play a Prisoner's Dilemma game with each other and where players are of different types. Together, these papers make it clear that endogenizing interaction can affect play, albeit in specific settings.…”

Section: Related Literaturementioning

confidence: 99%

Social games: Matching and the play of finitely repeated games

Jackson

Watts

2010

Games and Economic Behavior

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“…In line with the work by Ghosh and Ray (1996), Kranton (1996), or Carmichael and Macleod (1997), FO consider an infinitely large population of agents who play the repeated Prisoner's Dilemma and always have the option of voluntary separation and re-match. They conduct a thorough static analysis of this voluntarily separable repeated Prisoner's Dilemma without restrictions on the strategy space, other than assuming that individuals do not know the past history of their new partners when re-matching, i.e., players can react to any possible history of actions taken in their current partnership.…”

Section: Introductionmentioning

confidence: 99%

Leave and let leave: A sufficient condition to explain the evolutionary emergence of cooperation

Izquierdo

Vega‐Redondo

2014

Journal of Economic Dynamics and Control

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The option to leave your current partner in response to his behavior, also known as conditional dissociation, is a mechanism that has been shown to promote the emergence and stability of cooperation in many social interactions. This mechanism, nevertheless, has always been studied in combination with other factors that are known to support cooperation by themselves. In this paper, we isolate the effect of conditional dissociation on the evolution of cooperation and show that this mechanism is enough to sustain a significant level of cooperation if the expected lifetime of individuals is sufficiently long. Graphical abstract:

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Cooperation in Community Interaction without Information Flows

Cited by 250 publications

References 3 publications

A Theory of Contracts with Limited Enforcement

A Theory of Contracts with Limited Enforcement

Social games: Matching and the play of finitely repeated games

Leave and let leave: A sufficient condition to explain the evolutionary emergence of cooperation

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