Building Routines: Learning, Cooperation, and the Dynamics of Incomplete Relational Contracts | Zendy

Sylvain Chassang | Zendy

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Building Routines: Learning, Cooperation, and the Dynamics of Incomplete Relational Contracts

Author(s) -

Sylvain Chassang

Publication year - 2010

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.100.1.448

Subject(s) - complete information , imperfect , microeconomics , perfect information , punishment (psychology) , path (computing) , economics , common knowledge (logic) , computer science , artificial intelligence , psychology , social psychology , linguistics , philosophy , multimodal logic , programming language , epistemic modal logic , description logic

This paper studies how agents with conflicting interests learn to cooperate when the details of cooperation are not common knowledge. It considers a repeated game in which one player has incomplete information about when and how her partner can provide benefits. Initially, monitoring is imperfect and cooperation requires inefficient punishment. As the players' common history grows, the uninformed player can learn to monitor her partner's actions, which allows players to establish more efficient cooperative routines. Because revealing information is costly, it may be optimal not to reveal all the existing information, and efficient equilibria can be path-dependent. (JEL C73, D82, D83, D86)

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