Voluntary Cooperation Based on Equilibrium Retribution - An Experiment Testing Finite-Horizon Folk Theorems

Lisa V. Bruttel (), Werner Güth (), Ulrich Kamecke () and Vera Popova ()
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Werner Güth: Max Planck Institute of Economics, Strategic Interaction Group
Ulrich Kamecke: Humboldt-University Berlin, Department of Business and Economics
Vera Popova: Max Planck Institute of Economics, Strategic Interaction Group

No 2009-030, Jena Economic Research Papers in Economics from Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, Thueringer Universitaets- und Landesbibliothek

Abstract: Unlike previous attempts to implement cooperation in a prisoners' dilemma game with an infinite horizon in the laboratory, we focus on extended prisoners' dilemma games in which a second (pure strategy) equilibrium allows for voluntary cooperation in all but the last round. Our four main experimental treatments distinguish long versus short horizon and strict versus non-strict additional equilibrium compared to the control treatment, a standard prisoners' dilemma. Quite surprisingly, according to our results, only a strict additional equilibrium increases cooperation rate for a given time horizon. As expected a longer time horizon promotes cooperation.

Keywords: Folk theorem; Finite horizon; Prisoners' dilemma; Experiment (search for similar items in EconPapers)
JEL-codes: C73 C91 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
Date: 2009-04-21

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Persistent link: http://EconPapers.repec.org/RePEc:jrp:jrpwrp:2009-030

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