Cooperation in stochastic OLG games

Matthias Messner, Mattias K. Polborn

Research output: Contribution to journalArticlepeer-review


This paper builds on Cremer's (Quart. J. Econ. 101 (1986) 33) seminal analysis which shows that (almost) complete cooperation can be achieved as an equilibrium in a game played by overlapping generations of players if the institution in which players cooperate is infinitely lived. We analyze a similar model in which the costs of cooperation are subject to random shocks. Even if these random shocks are very small, the range of parameters for which cooperation can be sustained is decreased considerably in comparison to the deterministic case. Furthermore, we show how the efficient outcome can be approximated if the level of cooperation can be varied continuously and the cooperation technology has decreasing or constant returns to scale, while this is not possible in the case of increasing returns to scale.

Original languageEnglish (US)
Pages (from-to)152-168
Number of pages17
JournalJournal of Economic Theory
Issue number1
StatePublished - Jan 1 2003
Externally publishedYes


  • Cooperation
  • Game theory
  • Overlapping generations

ASJC Scopus subject areas

  • Economics and Econometrics


Dive into the research topics of 'Cooperation in stochastic OLG games'. Together they form a unique fingerprint.

Cite this