Cooperative and Competitive Reasoning: From Games to Revolutions

Abstract

I develop a game theoretic model where players use two different reasoning processes in strategic situations: cooperative and competitive. Players always consider cooperating at first: if they believe others will cooperate with enough probability, they will do so; otherwise they behave competitively. The model generalizes Level-k and team reasoning models, and provides a unified explanation for several important phenomena. In Rubinstein’s Email game, players coordinate successfully upon receiving enough messages. In 2×2 games of complete information, the solution concept lies between Pareto dominance and risk-dominance. In coordination games, the model explains several experimental facts that cannot be accounted for by global games, especially the fact that people coordinate more with public rather than private information. I provide a generalization of the model that relaxes the epistemic requirements for cooperative behavior, and apply it to analyze revolutions.