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Collusive behaviour in finite repeated games with bonding

Eswaran, Mukesh and Lewis, Tracy R. (1983) Collusive behaviour in finite repeated games with bonding. Social Science Working Paper, 466. California Institute of Technology , Pasadena, CA. https://resolver.caltech.edu/CaltechAUTHORS:20170922-164108849

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Abstract

In finite repeated games, it is not possible to enforce collusive behaviour using deterrent strategies because of the "unraveling" of cooperative behaviour in the last period. This paper demonstrates that under certain conditions collusion among the players can be maintained if they can post a bond which they must forfeit if they defect from the cooperative mode. We show that the incentives to cooperate increase as the period of interaction grows in that the size of the bond required to deter defection becomes arbitrarily small as the number of periods in the game increases.


Item Type:Report or Paper (Working Paper)
Related URLs:
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http://resolver.caltech.edu/CaltechAUTHORS:20170925-110047287Related ItemLater version published in Economics Letters
Additional Information:Published as Eswaran, Mukesh, and Tracy Lewis. "Collusive behaviour in finite repeated games with bonding." Economics Letters 20.3 (1986): 213-216.
Group:Social Science Working Papers
Series Name:Social Science Working Paper
Issue or Number:466
Record Number:CaltechAUTHORS:20170922-164108849
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20170922-164108849
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81782
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:25 Sep 2017 18:08
Last Modified:03 Oct 2019 18:47

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