COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 1601

Social Memory and Evidence from the Past

Luca Anderlini, Dino Gerardi and Roger Lagunoff

January 2007

Examples of repeated destructive behavior abound throughout the history of human societies. This paper examines the role of social memory — a society's vicarious beliefs about the past — in creating and perpetuating destructive conflicts. We examine whether such behavior is consistent with the theory of rational strategic behavior.

We analyze an infinite-horizon model in which two countries face off each period in an extended Prisoner's Dilemma game in which an additional possibility of mutually destructive "all out war" yields catastrophic consequence for both sides. Each country is inhabited by a dynastic sequence of individuals who care about future individuals in the same country, and can communicate with the next generation of their countrymen using private messages. The two countries' actions in each period also produce physical evidence; a sequence of informative but imperfect public signals that can be observed by all current and future individuals.

We find that, provided the future is sufficiently important for all individuals, regardless of the precision of physical evidence from the past there is an equilibrium of the model in which the two countries' social memory is systematically wrong, and in which the two countries engage in all out war with arbitrarily high frequency.

Surprisingly, we find that degrading the quality of information that individuals have about current decisions may "improve" social memory so that it can no longer be systematically wrong. This in turn ensures that arbitrarily frequent all out wars cannot take place.

JEL Classification: C72, C79, D80, D83, D89

Keywords: Social memory, Private communication, Dynastic games, Physical evidence