Prisoner’s Dilemma with Talk∗

When players in a game can communicate they may learn each other’s strategy. It is then natural to define a player’s strategy as a mapping from what he has learned about the other players ’ strategies into actions. In this paper we investigate the consequences of this possibil-ity in two-player games and show that it expands the set of equilibrium outcomes in one-shot games. When strategies are observable with certainty, any feasible and individually rational out-come can be sustained in equilibrium. Our framework can account for both cooperation and correlation in the players ’ strategies in the prisoner’s dilemma