We consider a multitype population model with unobservable types, in which players are engaged in the `mutual help' game: each player can increase her partner's fitness at a cost to oneself. All individuals prefer free riding to cooperation, but some of them, helpers, can establish reciprocal cooperation in a long-term relationship. Such heterogeneity can drive cooperation through a partner selection mechanism under which helpers choose to interact with one another and shun non-helpers. However, in contrast to the existing literature, we assume that each individual is matched with an anonymous partner, and therefore, stable cooperation cannot be achieved by partner selection per se. We suggest that helpers can signal their type to one another in order to establish long-term relationships, and we show that a reliable signal always exists. Moreover, due to the difference in future benefits of a long-term relationship for helpers and non-helpers, the signal need not be a handicap, in the sense that the cost of the signal need not be correlated with type.
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Paper provided by Center for Rationality and Interactive Decision Theory, Hebrew University, Jerusalem in its series Discussion Paper Series with number
dp483.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
David Austen-Smith & Jeffrey S. Banks, 1998.
"Cheap Talk and Burned Money,"
Discussion Papers
1245, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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