www.sire.ac.uk When Do We Learn to Cooperate? The Role of Social Learning in Social Dilemmas

In this paper, I look at the interaction between social learning and coopera-tive 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 con-ceal 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 so-cial 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. JEL Codes: C72