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July  2019, 6(3): 211-219. doi: 10.3934/jdg.2019015

Social networks and global transactions

Yuki Kumagai ,

School of Management, Yasuda Women's University, 6-13-1 Yasuhigashi, Hiroshima, 731-0153, Japan

* Corresponding author: Yuki Kumagai

Received  March 2019 Published  July 2019

In the repeated prisoner's dilemma with private monitoring, Bhaskar and Obara [2] construct a belief-based mixed trigger strategy which may be modified to approximate full cooperation when a public randomisation device is available. By modifying their assumption about trading relationships, this paper generalises the model and demonstrates that without introducing public randomisations, long-run cooperation may be approximately sustained by mixed trigger strategies with delayed communication. By applying our model, we investigate when efficient trade is attainable in a nonmarket trading system of social networks by looking into a role of communication in long-run community enforcement of efficient trade.

Keywords: Repeated trade, moral hazard, delayed communication, social networks, efficiency of trade.
Mathematics Subject Classification: Primary: 91A25, 91B60; Secondary: 91B44.
Citation: Yuki Kumagai. Social networks and global transactions. Journal of Dynamics & Games, 2019, 6 (3) : 211-219. doi: 10.3934/jdg.2019015
References:
[1]

D. Abreu, P. Milgrom and D. Pearce, Information and timing in repeated partnerships, Econometrica, 59 (1991), 1713-1733.  doi: 10.2307/2938286.  Google Scholar

[2]

V. Bhaskar and I. Obara, Belief-based equilibria in the repeated prisoners' dilemma with private monitoring, Journal of Economic Theory, 102 (2002), 40-69.  doi: 10.1006/jeth.2001.2878.  Google Scholar

[3]

G. Ellison, Cooperation in the prisoner's dilemma with anonymous random matching, Review of Economic Studies, 61 (1994), 567-588.  doi: 10.2307/2297904.  Google Scholar

[4]

D. Fudenberg, D. Levine and E. Maskin, The folk theorem with imperfect public information, Econometrica, 62 (1994), 997-1039.  doi: 10.2307/2951505.  Google Scholar

[5] A. Greif, Institutions and the Path to the Modern Economy: Lessons from Medieval trade, Cambridge University Press, Cambridge and New York, 2006.  doi: 10.1017/CBO9780511791307.  Google Scholar
[6]

M. Kandori, Social norms and community enforcement, Review of Economic Studies, 59 (1992), 63-80.   Google Scholar

[7]

M. Kandori, Repeated games played by overlapping generations of players, Review of Economic Studies, 59 (1992), 81-92.  doi: 10.2307/2297926.  Google Scholar

[8]

R. Radner, R. Myerson and E. Maskin, An example of a repeated partnership game with discounting and with uniformly inefficient equilibria, Review of Economic Studies, 53 (1986), 59-69.  doi: 10.2307/2297591.  Google Scholar

[9]

J. Rauch and V. Trindade, Ethnic Chinese networks in international trade, Review of Economics and Statistics, 84 (2002), 116-130.   Google Scholar

show all references

References:
[1]

D. Abreu, P. Milgrom and D. Pearce, Information and timing in repeated partnerships, Econometrica, 59 (1991), 1713-1733.  doi: 10.2307/2938286.  Google Scholar

[2]

V. Bhaskar and I. Obara, Belief-based equilibria in the repeated prisoners' dilemma with private monitoring, Journal of Economic Theory, 102 (2002), 40-69.  doi: 10.1006/jeth.2001.2878.  Google Scholar

[3]

G. Ellison, Cooperation in the prisoner's dilemma with anonymous random matching, Review of Economic Studies, 61 (1994), 567-588.  doi: 10.2307/2297904.  Google Scholar

[4]

D. Fudenberg, D. Levine and E. Maskin, The folk theorem with imperfect public information, Econometrica, 62 (1994), 997-1039.  doi: 10.2307/2951505.  Google Scholar

[5] A. Greif, Institutions and the Path to the Modern Economy: Lessons from Medieval trade, Cambridge University Press, Cambridge and New York, 2006.  doi: 10.1017/CBO9780511791307.  Google Scholar
[6]

M. Kandori, Social norms and community enforcement, Review of Economic Studies, 59 (1992), 63-80.   Google Scholar

[7]

M. Kandori, Repeated games played by overlapping generations of players, Review of Economic Studies, 59 (1992), 81-92.  doi: 10.2307/2297926.  Google Scholar

[8]

R. Radner, R. Myerson and E. Maskin, An example of a repeated partnership game with discounting and with uniformly inefficient equilibria, Review of Economic Studies, 53 (1986), 59-69.  doi: 10.2307/2297591.  Google Scholar

[9]

J. Rauch and V. Trindade, Ethnic Chinese networks in international trade, Review of Economics and Statistics, 84 (2002), 116-130.   Google Scholar

Table 1.  The stage-game payoffs
$ e $ $ s $
$ e $ $ 1, 1 $ $ -l, 1+g $
$ s $ $ 1+g, - l $ $ 0 $, $ 0 $
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$ e $ $ s $
$ e $ $ 1, 1 $ $ -l, 1+g $
$ s $ $ 1+g, - l $ $ 0 $, $ 0 $
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