When contracts are not enforceable, or property rights are not clearly defined, individuals might lack an incentive to carry out costly investments even when they are socially efficient. Some recent contributions such as Ellingsen and Robles (2002) prove that this problem might be less dramatic...

This paper addresses the emergence of cooperation in asymmetric pris- oners' dilemmas in which one player chooses after having observed the other player's choice (Trust Game). We use the finite automata approach with complexity costs to study the equilibria of the repeated version of this game....