Can the shadow of the future harm cooperation?

Abstract

It is generally thought that in long-term relationships high valuations of the future are conducive to cooperation. In an intertemporal model of conflict, however, we demonstrate the possibility of the opposite effect: a longer shadow of the future may harm cooperation. In particular, we show that the degree of inefficiency is positively related to: (i) the agents' valuation of the future, (ii) potential growth rates in resources, (iii) the size of initial resource endowments, and (iv) the effectiveness of conflict.