## Negotiating Cooperation Under Uncertainty : Communication in Noisy, Indefinitely Repeated Interactions

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2018
##### Series
IZA Discussion Paper; No. 11897
##### Publication type
Working Paper/Technical Report
Published
##### Abstract
Case studies of cartels and recent theory suggest that repeated communication is key for stable cooperation in environments where signals about others' actions are noisy. However, empirically the exact role of communication is not well understood. We study cooperation under different monitoring and communication structures in the laboratory. Under all monitoring structures - perfect, imperfect public, and imperfect private - communication boosts efficiency. However, under imperfect monitoring, where actions can only be observed with noise, cooperation is stable only when subjects can communicate before every round of the game. Beyond improving coordination, communication increases efficiency by making subjects' play more lenient and forgiving. We further find clear evidence for the exchange of private information - the central role ascribed to communication in recent theoretical contributions.
##### Subject (DDC)
004 Computer Science
##### Keywords
Infinitely Repeated Games, Monitoring, Communication, Cooperation, Strategic Uncertainty, Prisoner's Dilemma
##### Cite This
ISO 690DVORAK, Fabian, Sebastian FEHRLER, 2018. Negotiating Cooperation Under Uncertainty : Communication in Noisy, Indefinitely Repeated Interactions
BibTex
@techreport{Dvorak2018Negot-51330,
year={2018},
series={IZA Discussion Paper},
title={Negotiating Cooperation Under Uncertainty : Communication in Noisy, Indefinitely Repeated Interactions},
number={No. 11897},
url={https://www.iza.org/publications/dp/11897/negotiating-cooperation-under-uncertainty-communication-in-noisy-indefinitely-repeated-interactions},
author={Dvorak, Fabian and Fehrler, Sebastian}
}

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2020-10-13
Yes