History, Expectations, And Leadership In Evolution Of Cooperation

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Executive Summary

The authors study the evolution of the social norm of "Cooperation" in a dynamic environment. Each agent lives for two periods and interacts with agents from the previous and next generations via a coordination game. "History" matters because agents only receive noisy information about the play of the previous generation and their interpretation of these signals is shaped by history. They characterize the conditions under which history completely drives equilibrium play, leading to a social norm of high or low cooperation.

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