"Voluntarily Separable Prisoner's Dilemma with Reference Letters"

We consider voluntarily separable repeated Prisoner's Dilemma in which a pair of players meet randomly and repeatedly play Prisoner's Dilemma only by mutual agreement. Fujiwara-Greve and Okuno-Fujiwara (2007) consider the case that once a partnership is dissolved there is no information flow to other partnerships. We consider the case that players can issue a reference letter to the partner if they entered cooperation periods, but the content of a letter is not verifiable. We show that the sheer existence of a letter shortens the trust-building periods of new matches and thus improves efficiency in equilibrium.

"Bubble Economy and Financial System Failures After Its Crush: Form the Viewpoint of '1975' Regime"(in Japanese)

We analyze the performance of the Japanese Economy in the last 30 years. We do so by emphasizing the fact that an economy is a social system and people are concerned with social values and norms. We point out that the employment security, which became socially guaranteed during the aftermath of the first oil shock, and the coercion of unitarism, rather than plurarism, became prevalent in this period. These factors are behind the birth and continuation of financial bubble in the late 80's as well as the indecisiveness of financial policies in the 90's. They also positively affected the competitiveness of exporting industries but negatively affected regulated and non-tradable industries by regulation captures and accumulation of political rents. What is needed in Japan is to revive a value system that allow plural ways of thinking and improve adaptability.

"Impacts of Information Technology on Society: Information, Intellectual Property and Coordination Mechanism"(in Japanese)

We analyzed the effects of the progress and propagation of information technology on economic activity and the form of economic organizations from three different viewpoints. First, drastic reduction of information production and information processing costs produced the bursts of information, the rapid change of economy activity, and the globalization of economy. Second is the digitalization of goods and services, which made unbundling of information written in digital signal from the medium possible. With such technology, one can duplicate information perfectly with nominal cost only. This makes information pure public good and creates the serious problem of appropriation. The last and the most importantly, we discuss the digitalization of coordination. Progress of the informational and communication technology makes coordination more accurate and inexpensive. This makes the electronic coordination between parts and organization easier and less costly. This promotes the unbundling of parts or elements that had been bundled because of technical reason and rebundle them in much more natural way. We argue that this brings about the phenomena often described as modularization and open-architecture.

Voluntarily Separable Repeated Prisoner’s Dilemma.

Abstract: In Fujiwara-Greve and Okuno-Fujiwara (2009), an evolutionary stability concept was defined by allowing mutations of any strategy. However, in human societies, not all strategies are likely to be tried out when a player considers what happens in the future. In this paper we introduce the "shared belief" of potential continuation strategies, generated and passed on in a society, and mutations are restricted only among best responses against the shared belief. We show that a myopic strategy becomes a part of a bimorphic equilibrium under a shared belief and contributes to a higher payoff than ordinary neutrally stable distributions'

"Propensity to Procrasternate and Collective Decisionmaking Systems in Japan"(in Japanese)

We often see people procrastinate what should be done immediately. This propensity seems to be especially high in Japan as bad loans problem in 1990 exemplifies. Propcrastinations in collective decision making tend to occur when there are many stakeholders. They tend to waste time while trying to avoid responsibility and shifting blame to others. In terms of game theory, corresponding payoff structure is known as the game of chicken. This game has pure strategy efficient equilibria and mixed strategy inefficient equilibrium. Under the best-response dynamic popular become stable, depending upon whether or not role-contingent strategies are available. Whether or not payoff irrelevant role of players, such as role of main-bank and/or role of person in charge of the case, are respected by fellow players may decide the ultimate outcome of the game, hence the extent of procrastination. We discuss relationship between this observation and institutional characteristic of collective decision making system in Japan.

"Communication and Coordination in Organizations" (in Japanese)

This paper analyzes a model of coordination where two agents attempt to coordinate their actions through communication. One agent (Sender) is engaged in finding the true state of nature in a stochastic environment and the action that best fits the state. The other agent (Receiver) in turn tries to ``understand'' the Sender's message and chooses his own action. Since the communication succeeds only probilistically, so does the coordination. In our model, two different modes of coordination are identified: the integral-type coordination based on the communication of soft information and the default-type coordination based on the predetermined default value. We find that the agents might choose the latter mode of coordination when the cost arising from the failed communication is high relative to the benefit from coordinating on the state-contingent best actions. Applications to the economics of organization are also discussed.

"Social Norms and Voluntary Cooperations"(in Japanese)

Unlike the ordinary repeated games, in the real world, people can run away after cheating. In this paper we construct a social game, in which players can repeat Prisoners' Dilemma only if both players agree to continue the partnership. We investigate how a social sanction prevents moral hazard in such a voluntary relationship. We have three conclusions. First, it is possible to enforce voluntary long-term cooperation by trust-building. Second, the trust-building periods can be shortened under diverse strategy distributions. Third, if there is a reference letter system which conveys information that a partnership ended by an unavoidable cause, then the trust-building periods can be shortened as well.

"Increasing Complexity of Artifacts and the Role of Product Architecture"(in Japanese)

The purpose of the paper is twofold: One is to explain the concept of product architecture in the context of increasing complexity of artifacts; The other is to examine the condition under which the open-standard strategy is likely to be adopted. Dramatic decreases in mechanical information processing cost due to IT development induced hierarchical subdivision of artifacts with a modular structure consisting of numerous parts. This brought to the fore the question of how to solve the complicated coordination/integration problem between development of whole product system and that of individual parts. There are two ways of classifying solutions to this problem: One is the distinction between coordination by humans and coordination by product architecture; The other is the distinction between decentralized coordination through markets and cooperative coordination via organizations or networks. We argue that precommitted standardization and open development strategies are complements. We then set up a model for examining the problem faced by a monopolist with a core technology to decide to choose between open-standard strategy or closed-integral strategy. Some comparative analytic results are provided.