Communication and Community Enforcement

We study the repeated prisoner’s dilemma with random matching, a canonical model of community enforcement with decentralized information. We assume that (1) with small probability, each player is a “bad type” who never cooperates, (2) players observe and remember their partners’ identities, and (3) each player interacts with others frequently but meets any particular partner infrequently. We show that these assumptions preclude cooperation in the absence of explicit communication but that introducing within-match cheap talk communication restores cooperation. Thus, communication is essential for community enforcement.