Risk, Temptation, and Efficiency in the One-Shot Prisoner's Dilemma

Simon Gächter, Kyeongtae Lee, Martin Sefton () and Till O. Weber ()
Additional contact information
Kyeongtae Lee: Bank of Korea
Martin Sefton: University of Nottingham
Till O. Weber: Newcastle University

No 14895, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The prisoner's dilemma (PD) is arguably the most important model of social dilemmas, but our knowledge about how a PD's material payoff structure affects cooperation is incomplete. In this paper we investigate the effect of variation in material payoffs on cooperation, focussing on one-shot PD games where efficiency requires mutual cooperation. Following Mengel (2018) we vary three payoff indices. Indices of risk and temptation capture the unilateral incentives to defect against defectors and co-operators respectively, while an index of efficiency captures the gains from cooperation. We conduct two studies: first, varying the payoff indices over a large range and, second, in a novel orthogonal design that allows us to measure the effect of one payoff index while holding the others constant. In the second study we also compare a student and non-student subject pool, which allows us to assess generalizability of results. In both studies we find that temptation reduces cooperation. In neither study, nor in either subject pool of our second study, do we find a significant effect of risk.

Keywords: risk; temptation; cooperation; prisoner’s dilemma; efficiency (search for similar items in EconPapers)
JEL-codes: A13 C91 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2021-11
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - revised version published as 'The role of payoff parameters for cooperation in the one-shot Prisoner's Dilemma' in: European Economic Review , 2024, 166, 104753,

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Working Paper: Risk, Temptation, and Efficiency in the One-Shot Prisoner's Dilemma (2021)
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