Cooperation in Social Dilemmas Through Position Uncertainty

Abstract

We present a natural environment that sustains full cooperation in one-shot social dilemmas among a finite number of self-interested agents. Players sequentially decide whether to contribute to a public good. They do not know their position in the sequence, but observe the actions of some predecessors. Since agents realise that their own action may be observed, they have an incentive to contribute in order to induce potential successors to also do so. Full contribution can then emerge in equilibrium. The same environment leads to full cooperation in the prisoners' dilemma.

Observational learning in large anonymous games

“…As a result, is a singleton in Example . In stark contrast to Proposition in this paper, Gallice and Monzón show that full contribution can occur in equilibrium. Since there are no mistakes, each individual agent can determine the aggregate outcome.…”

“…After all agents choose an action, the total amount invested gets multiplied by 3 and equally shared among all agents. There is only one state of the world in Gallice and Monzón (forthcoming), so signals play no role. Contribution by all agents is socially optimal.…”

“…An agent who can affect aggregate outcomes needs to take into account the effect of his decision on others' actions. Gallice and Monzón (forthcoming) show that this strategic component can have a strong effect on the aggregate play when there is a finite number of agents who never make mistakes . However, this should intuitively be less relevant in large games.…”

“… In Gallice and Monzón (forthcoming), a finite number of agents must decide sequentially whether to contribute to a public good. Since there are no mistakes, each individual agent can determine the aggregate outcome.…”