Choosing Opponents in Games of Cooperation and Coordination

We analyze a cooperation game and a coordination game in an evo-lutionary environment. Agents make noisy observations of opponent’s propensity to play dove, called reputation, and form preferences over op-ponents based on their reputation. A game takes place when two agents agree to play. Socially optimal cooperation is evolutionarily stable when reputation perfectly reflects propensity to cooperate. With some reputa-tion noise, there will be at least some cooperation. Individual concern for reputation results in a seemingly altruistic behavior. The degree of coop-eration is decreasing in anonymity. If reputation is noisy enough, there is no cooperation in equilibrium. In the coordination game, the efficient equilibrium is chosen and agents with better skills to observe reputation earn more