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

Yutaka Kayaba, Hitoshi Matsushima and Tomohisa Toyama

No HIAS-E-23, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: We experimentally examine repeated prisoners' dilemma with random termination, where monitoring is imperfect and private. Our estimation indicates that a significant proportion of subjects follow generous Tit-For-Tat (g-TFT) strategies, straightforward extensions of Tit-For-Tat. However, the observed retaliating policies are inconsistent with the g-TFT equilibria. Contrarily to the theory, subjects tend to retaliate more with high accuracy than with low accuracy. They tend to retaliate more than the theory predicts with high accuracy, while they tend to retaliate lesser with low accuracy. In order to describe these results as unique equilibrium, we demonstrate an alternative theory that incorporates naïveté and reciprocity.

Keywords: Repeated Prisoner's Dilemma; Imperfect Private Monitoring; Experiments; Generous Tit-For-Tat; Behavioral Model (search for similar items in EconPapers)
JEL-codes: C70 C71 C72 C73 D03 (search for similar items in EconPapers)
Pages: 66 p.
Date: 2016-03-18
New Economics Papers: this item is included in nep-exp and nep-gth
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