Equilibrium selection in infinitely repeated games with communication

Maximilian Andres ()
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Maximilian Andres: University of Potsdam, Berlin School of Economics

No 75, CEPA Discussion Papers from Center for Economic Policy Analysis

Abstract: The present paper proposes a novel approach for equilibrium selection in the infinitely repeated prisoner’s dilemma where players can communicate before choosing their strategies. This approach yields a critical discount factor that makes different predictions for cooperation than the usually considered sub-game perfect or risk dominance critical discount factors. In laboratory experiments, we find that our factor is useful for predicting cooperation. For payoff changes where the usually considered factors and our factor make different predictions, the observed cooperation is consistent with the predictions based on our factor.

Keywords: cooperation; communication; infinitely repeated game; machine learning (search for similar items in EconPapers)
JEL-codes: C73 C92 D83 (search for similar items in EconPapers)
Date: 2024-04
New Economics Papers: this item is included in nep-exp and nep-gth
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:pot:cepadp:75

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