UNCERTAINTY AND THE EVOLUTION OF COOPERATION

It is well known that inferential errors can induce nice but provocabl e strategies to engage in vendettas with each other. It is therefore g enerally believed that imperfect monitoring reduces the payoffs of suc h strategies and impairs the evolution of cooperation. The current lit erature, however, only scrutinizes specific strategies, either analyti cally or in particular tournaments. This article examines in a more ge neral way how monitoring uncertainty affects the fate of cooperation i n tournaments of the iterated prisoner's dilemma (IPD). The first set of results shows that imperfect monitoring does create a sharp trade-o ff between cooperativeness and unexploitability. The second set examin es how random shocks affect the tournament payoffs of several large cl asses of strategies in the IPD, and shows how noise can help certain n ice strategies, The third set analyzes how imperfect monitoring can fa cilitate the emergence of cooperation based on a population of non-nic e strategies. Thus the idea that inferential uncertainty always harms nice strategies and always impairs the evolution of cooperation must b e sharply qualified.