Game-theoretical analyses of the n-person Prisoner's Dilemma (PD) and of group production have largely ignored the impact of threshold effects on the evolution of cooperation. This article introduces a model where uncooperative action cannot be detected as long as it does not exceed a certain level. The resulting breakdown of cooperation parallels the backward induction effect of a finitely repeated PD and might illustrate pessimistic social theories like Olson's “institutional sclerosis.” But surprisingly, cooperation remains at an intermediate level if simple random variations of population size occur. This hints at the possibility that the mentioned pessimism is an often overrated position.
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