Monitoring Accuracy and Retaliation in Infinitely Repeated Games with Imperfect Private Monitoring: Theory and Experiments

Hitoshi Matsushima and Tomohisa Toyama
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Tomohisa Toyama: Faculty of Engineering, Kogakuin University

No CIRJE-F-795, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: This paper experimentally examines infinitely repeated prisoners' dilemma games with imperfect private monitoring and random termination where the probability of termination is very low. Laboratory subjects make the cooperative action choices quite often, and make the cooperative action choice when monitoring is accurate more often than when it is inaccurate. Our experimental results, however, indicate that they make the cooperative action choice much less often than the game theory predicts. The subjects' naïveté and social preferences concerning reciprocity prevent the device of regime shift between the reward and punishment phases from functioning in implicit collusion.

Pages: 42 pages
Date: 2011-04
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Citations: View citations in EconPapers (10)

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