Cooperation in the Finitely Repeated Prisoner's Dilemma

Matthew Embrey, Guillaume R. Frechette and Sevgi Yuksel
Additional contact information
Guillaume R. Frechette: NYU
Sevgi Yuksel: UCSB

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: More than half a century after the first experiment on the finitely repeated prisoner's dilemma, evidence on whether cooperation decreases with experience - as suggested by backward induction - remains inconclusive. This paper provides a meta-analysis of prior experimental research and reports the results of a new experiment to elucidate how cooperation varies with the environment in this canonical game. We describe forces that affect initial play (formation of cooperation) and unraveling (breakdown of cooperation). First, contrary to the backward induction prediction, the parameters of the repeated game have a significant effect on initial cooperation. We identify how these parameters impact the value of cooperation - as captured by the size of the basin of attraction of Always Defect – to account for an important part of this effect. Second, despite these initial differences, the evolution of behavior is consistent with the unraveling logic of backward induction for all parameter combinations. Importantly, despite the seemingly contradictory results across studies, this paper establishes a systematic pattern of behavior: subjects converge to use threshold strategies that conditionally cooperate until a threshold round; and conditional on establishing cooperation, the first defection round moves earlier with experience. Simulation results generated from a learning model estimated at the subject level provide insights into the long-term dynamics and the forces that slow down the unraveling of cooperation.

Keywords: repeated games; prisoners dilemma; threshold strategies; basin of attraction (search for similar items in EconPapers)
JEL-codes: C73 C92 (search for similar items in EconPapers)
Date: 2016-02
New Economics Papers: this item is included in nep-cdm, nep-evo, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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http://www.sussex.ac.uk/economics/documents/wps-86-2016.pdf

Related works:
Journal Article: Cooperation in the Finitely Repeated Prisoner’s Dilemma (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:08616

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