Equilibrium Selection in the Repeated Prisoner's Dilemma: Axiomatic Approach and Experimental Evidence

Matthias Blonski, Peter Ockenfels and Giancarlo Spagnolo

American Economic Journal: Microeconomics, 2011, vol. 3, issue 3, 164-92

Abstract: We propose an axiomatic approach for equilibrium selection in the discounted, infinitely repeated symmetric Prisoner's Dilemma. Our axioms characterize a unique selection criterion that is also useful as a tool for applied comparative statics exercises as it results in a critical discount factor δ* strictly larger than δ, the standard criterion that has often been used in applications. In an experimental test we find a strong predictive power of our proposed criterion. For parameter changes where the standard and our criterion predict differently, changes in observed cooperation follow predictions based on δ* . (JEL C72, C73, C92, D81)

JEL-codes: C72 C73 C92 D81 (search for similar items in EconPapers)
Date: 2011
Note: DOI: 10.1257/mic.3.3.164
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Citations: View citations in EconPapers (122)

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