Scandinavian Working Papers in Economics
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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 167:
Rationality, Transparency, and Evolutionary Selection

Karl Wärneryd ()

Abstract: We discuss attempts to justify conditional cooperation in the Prisoners’ Dilemma based on the idea of identifying an opponent’s strategy. We note that the concept of such complete transparency of decision procedures is logically inconsistent. Furthermore, we observe that attempts to justify indirect transparency on evolutionary grounds, by the development of physical characteristics that signal behavior, must fail. Finally, we suggest a model of partial transparency that is logically consistent and generates conditional cooperation.

Keywords: Rationality; evolution; cooperation; transparency; (follow links to similar papers)

JEL-Codes: C72; (follow links to similar papers)

13 pages, April 1997

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