Sorting and sustaining cooperation

Abstract

This paper look at selfish types and conditional cooperators working together in teams. Players knows that lay-offs will occur at a fixed future date, which creates incentives similar to those in a finitely repeated prisoners' dilemma.The results show that the equilibrium with the most cooperation tends to be a sorting equilibrium, where players reveal their types so that conditional cooperators can identify and cooperate with one another. Changes in parameter values that in most situations would make cooperation more attractive, such as an increase in the discount factor, the fraction of conditional cooperators or the pay-off to reciprocated cooperation, can actually reduce equilibrium cooperation if they decrease an egoist's incentive to sort.

Long-Term Commitment and Cooperation

“…Vikander (2013) argued that in finitely-repeated social dilemmas, the best way to sustain cooperation is through sorting, whereby conditional cooperators manage to identify each other and to isolate themselves from opportunistic, selfish people. We show that, while sorting plays a role, endogenous commitment choice gives a large, lasting boost to cooperation even once almost everybody chooses it and the sorting argument is thus of minor importance.…”