Inequity aversion and limited foresight in the repeated prisoner's dilemma

Arbeitspapier

Reanalyzing 12 experiments on the repeated prisoner's dilemma (PD), we robustly observe three distinct subject types: defectors, cautious cooperators and strong cooperators. The strategies used by these types are surprisingly stable across experiments and uncorrelated with treatment parameters, but their population shares are highly correlated with treatment parameters. As the discount factor increases, the shares of defectors decrease and the relative shares of strong cooperators increase. Structurally analyzing behavior, we next find that subjects have limited foresight and assign values to all states of the supergame, which relate to the original stage-game payoffs in a manner compatible with inequity aversion. This induces the structure of coordination games and approximately explains the strategies played using Schelling's focal points: after (c;c) subjects play according to the coordination game's cooperative equilibrium, after (d;d) they play according to its defective equilibrium, and after (c;d) or (d;c) they play according to its mixed equilibrium.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Center for Mathematical Economics Working Papers ; No. 652

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Stochastic and Dynamic Games; Evolutionary Games; Repeated Games ; Design of Experiments: Laboratory, Group Behavior ; Consumer Economics: Empirical Analysis
• Subject: Repeated game ; Behavior ; Tit-for-tat ; Mixed strategy ; Memory ; Belief-free equilibrium ; Laboratory experiment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Backhaus, Teresa ; Breitmoser, Yves
• Event: Veröffentlichung
• (who): Bielefeld University, Center for Mathematical Economics (IMW)
• (where): Bielefeld
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/238130
• URN: urn:nbn:de:0070-pub-29569398
• Last update: 10.03.2025, 11:42 AM CET