The formation of cooperative relationships

Journal Article (Journal Article)

This article investigates how individuals forge and maintain cooperative relationships when there is always the possibility of starting again with a new partner. The analysis shows that an ever-present opportunity to form new relationships need not destroy cooperation. Simple strategies achieve the (constrained) optimal level of cooperation. These strategies involve a "bond" in the form of reduced utility at the beginning of a relationship. Two newly matched agents may have an incentive to forgo paying this bond, given that everyone else in the population requires payment of a bond to start a new relationship. This incentive disappears, however, if there is enough initial uncertainty about a new partner's valuation of future utility. Accounts from the sociological and anthropological literature indicate that individuals may indeed pay bonds to form cooperative relationships.

Full Text

Duke Authors

Cited Authors

  • Kranton, RE

Published Date

  • January 1, 1996

Published In

Volume / Issue

  • 12 / 1

Start / End Page

  • 214 - 233

International Standard Serial Number (ISSN)

  • 8756-6222

Digital Object Identifier (DOI)

  • 10.1093/oxfordjournals.jleo.a023358

Citation Source

  • Scopus