## Abstract

In this paper, I look at the interaction between social learning and cooperative

behavior. I model this using a social dilemma game with publicly observed

sequential actions and asymmetric information about payoffs. I find that some

informed agents in this model act, individually and without collusion, to conceal

the privately optimal action. Because the privately optimal action is socially

costly the behavior of informed agents can lead to a Pareto improvement in a social dilemma. In my model I show that it is possible to get cooperative behavior

if information is restricted to a small but non-zero proportion of the population.

Moreover, such cooperative behavior occurs in a finite setting where it is public

knowledge which agent will act last. The proportion of cooperative agents within

the population can be made arbitrarily close to 1 by increasing the finite number

of agents playing the game. Finally, I show that under a broad set of conditions

that it is a Pareto improvement on a corner value, in the ex-ante welfare sense,

for an interior proportion of the population to be informed.

behavior. I model this using a social dilemma game with publicly observed

sequential actions and asymmetric information about payoffs. I find that some

informed agents in this model act, individually and without collusion, to conceal

the privately optimal action. Because the privately optimal action is socially

costly the behavior of informed agents can lead to a Pareto improvement in a social dilemma. In my model I show that it is possible to get cooperative behavior

if information is restricted to a small but non-zero proportion of the population.

Moreover, such cooperative behavior occurs in a finite setting where it is public

knowledge which agent will act last. The proportion of cooperative agents within

the population can be made arbitrarily close to 1 by increasing the finite number

of agents playing the game. Finally, I show that under a broad set of conditions

that it is a Pareto improvement on a corner value, in the ex-ante welfare sense,

for an interior proportion of the population to be informed.

Original language | English |
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Publisher | Edinburgh School of Economics Discussion Paper Series |

Number of pages | 31 |

Publication status | Published - 7 Jun 2011 |

### Publication series

Name | ESE Discussion Papers |
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No. | 206 |

## Keywords

- asymmetric information
- cooperation
- efficiency
- social learning
- social dilemmas
- C72
- D62
- D82
- D83