Uncertainty-driven Cooperation
Date: 2016-05-08 9:00 am – 9:30 am
Last modified: 2016-05-03
Abstract
We consider a repeated team production game in which there exists uncertainty about the production technology. We show that the presence of uncertainty may alleviate the inefficiencies due to the classic free-ridership problem. In the unique equilibrium of the model, the agents have additional
incentives to increase their effort, because doing so would influence their partners’ beliefs about the common state, consequently affecting future effort choices. We show that the resulting equilibrium effort level is higher than that in the complete information, and that the presence of uncertainty may even lead to over-provision of effort. We analyze the continuous-time limit of the model as well as the infinitely repeated team production game.
Last, we study an asymmetric information model in which some of the agents know the true state while the others are uninformed.