Preferences, Property Rights, and Anonymity in Bargaining Games

Abstract

The ethnologist, Diamond Jenness, who was asked by the Canadian government in 1913 to join Stefansson's Arctic expedition to study Eskimos for three years, records the following in his diary: Not all the cabins that stood empty had been vacated until the next winter … and from two poles dangled a score or more fox skins. It was the latter that particularly caught my attention. Here were what amounted to a year's earnings exposed wide open to the heavens, where the first passerby could appropriate them at his leisure. In reality, of course, they were as safe as in Brower's storeroom, for with a population so small, everyone always knew who was living where, and a pilferer had little or no chance of escaping detection.… honesty comes much more easily in a tiny community than it does in a great city, where misconduct always hopes that the multitude of alien tracks will cover up its own footprints. (Jenness, 1957, pp. 128–9) Noncooperative, nonrepeated game theory is about strangers with no shared history, like the residents of Jenness' “great city.”They meet, interact strategically in their individual self interests according to well specified rules and payoffs, and never meet again.These stark conditions are necessary to ensure that the noncooperative, nonrepeated game theoretic prediction for the interaction is not part of a sequence with a past and a future.Thus, repeated games are analyzed differently because now strangers can potentially cooperate by developing their own history and future.

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