The Analytics of Human Sociality
The folk theorem requires that each action taken by each player carry a signal that is conveyed to the other players. A signal is imperfect if all players receive the same signal; the signal is perfect if it accurately reports the player's action. The question of the signal quality required to obtain efficient cooperation is especially critical when the size of the game is considered. Generally, the folk theorem does not even mention the number of players, but in most situations in real life, the larger the number of players participating in a cooperative endeavor, the lower the average quality of the cooperation vs. defection signal because generally a player observes only a small number of other players with a high degree of accuracy, however large the group involved. This chapter explores this issue and illustrates the problem by applying the Fudenberg et al. (1994) framework to the Public Goods Game, which in many respects is representative of contexts for cooperation in humans.