Beliefs, learning, and personality in the indefinitely repeated prisoner’s dilemma

David Gill and Yaroslav Rosokha

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: The indefinitely repeated prisoner’s dilemma (IRPD) captures the trade-off between the short-term payoff from exploiting economic partners and the long-term gain from building successful relationships. We aim to understand more about how people form and use beliefs about others in the IRPD. To do so, we elicit beliefs about the supergame strategies chosen by others. We find that initial beliefs match behavior quite well and that most subjects choose strategies that perform well given their beliefs. Motivated by belief clustering, we use beliefs to estimate a level-k model of boundedly rational thinking. We analyze how beliefs and behavior evolve with experience: beliefs become more accurate over time, and we use beliefs to provide new evidence about the mechanism that underlies learning from experience. Finally, we find that a survey measure of trust predicts cooperative behavior and optimism about others’ cooperation, which helps to explain how trust underpins successful economic exchanges.

Keywords: Indefinitely repeated prisoner’s dilemma; infinitely repeated prisoner’s dilemma; cooperation; optimism; beliefs; belief elicitation; supergame strategies; level-k; bounded rationality; clustering; learning; best response; experimentation; strategy revision; personality; agreeableness; anxiety; cautiousness; kindness; manipulativeness; trust; factor analysis; Raven test; Quadratic Scoring Rule; game theory; experiment. JEL Classification: C72; C73; C91; D91 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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https://warwick.ac.uk/fac/soc/economics/research/c ... tions/wp489.2020.pdf

Related works:
Journal Article: Beliefs, Learning, and Personality in the Indefinitely Repeated Prisoner's Dilemma (2024)
Working Paper: Beliefs, learning, and personality in the indefinitely repeated prisoner's dilemma (2023)
Working Paper: Beliefs, Learning, and Personality in the Indefinitely Repeated Prisoner's Dilemma (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:cge:wacage:489

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