A Mechanism and Matching in a Social Dilemma

Abstract

Cooperation can be achieved via incentives from future interactions, specifically in the case of public monitoring. But, today, our social and professional spheres keep shifting rapidly and we interact often with strangers. We are interested in such sporadic interactions which can be modeled as a continuous Prisoner’s Dilemma in an environment of the symmetric market where the whole population is competing among themselves to interact with other agents who will contribute the most. The interaction is private, only the agents involved know how much they have contributed to each other’s well-being, and partners may change in the next period. In such an environment if the reputation of agents is not available, then there is no incentive to cooperate. In this paper, we show that if an experience reporting mechanism facilitates assortative matching, then cooperation and honest reporting is evolutionarily (neutral) stable.