The tit-for-tat strategy in iterated prisoners' dilemma games is examined in the presence of disturbances. It is shown that performance deteriorates drastically at arbitrarily low noise levels. The situation may be remedied by introducing some unconditional generosity. This may be done without exposing oneself to the risk of exploitation by the other party.

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The prospects for the spontaneous emergence of cooperation in n-person prisoner's dilemmas are studied within an evolutionary framework. Both purely cooperative regimes and states representing a mix of conditionally cooperative with noncooperative strategies turn out to be possible outcomes of the selection process, but only the latter correspond to evolutionarily stable strategies. Two-person games differ qualitatively from games with three or more players in that they are more propitious to cooperative regimes. Spontaneous cooperation in general collective-action games therefore appears less likely than much of the recent literature seems to indicate.

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The choice of rules for the central government budget process represents a trade-off between potentially conflicting goals. Budgetary reforms triggered by serious imbalances in public finances over the last two decades indicate that a political reorientation has taken place, giving more emphasis to macroeconomic impacts, long-term budgetary restrictions, and transparency in budget decision making. The paper analyses a number of generic problems of collective decision-making in the fiscal policy area and their relation to fundamental values upon which democratic states are built. The discussion is illustrated by experiences from a major budget process reform in Sweden between 1992 and 1997. The conclusion is that tighter fiscal discipline can be achieved without encroaching upon democratic values; it is argued that democracy can in fact be strengthened by such a shift of regime.