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Co-operation in the finitely repeated prisoner’s dilemma

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posted on 2023-06-09, 07:54 authored by Matthew EmbreyMatthew Embrey, Guillaume R Fréchette, Sevgi Yuksel
More than half a century after the first experiment on the finitely repeated prisoner’s dilemma, evidence on whether cooperation decreases with experience–as suggested by backward induction–remains inconclusive. This paper provides a meta-analysis of prior experimental research and reports the results of a new experiment to elucidate how cooperation varies with the environment in this canonical game. We describe forces that affect initial play (formation of cooperation) and unraveling (breakdown of cooperation). First, contrary to the backward induction prediction, the parameters of the repeated game have a significant effect on initial cooperation. We identify how these parameters impact the value of cooperation–as captured by the size of the basin of attraction of Always Defect–to account for an important part of this effect. Second, despite these initial differences, the evolution of behavior is consistent with the unraveling logic of backward induction for all parameter combinations. Importantly, despite the seemingly contradictory results across studies, this paper establishes a systematic pattern of behavior: subjects converge to use threshold strategies that conditionally cooperate until a threshold round; and conditional on establishing cooperation, the first defection round moves earlier with experience. Simulation results generated from a learning model estimated at the subject level provide insights into the long-term dynamics and the forces that slow down the unraveling of cooperation.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

The Quarterly Journal of Economics

ISSN

0033-5533

Publisher

Massachusetts Institute of Technology Press

Issue

1

Volume

133

Page range

509-551

Department affiliated with

  • Economics Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2017-09-13

First Open Access (FOA) Date

2019-08-26

First Compliant Deposit (FCD) Date

2017-09-13

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