Supporting Cooperation via Agreement Equilibrium
Mehmet Ismail and Ronald Peeters, Otago University
Abstract: We introduce 'agreement equilibrium' as a novel solution concept that can explain the abundance of cooperative behavior that is often observed in laboratory experiments in various contexts. The main idea of the agreement equilibrium is to identify behaviors that individuals can (tacitly) agree on while being ambiguous about their opponents' intentions to respect or to betray this (tacit) agreement. We investigate properties of the agreement equilibrium and illustrate the agreement equilibrium in a series of famous applications.