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

Yutaka Kayaba, Hitoshi Matsushima and Tomohisa Toyama
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Yutaka Kayaba: Faculty of Economics, The University of Tokyo
Tomohisa Toyama: Division of Liberal Arts, Kogakuin University, The University of Tokyo

No CIRJE-F-1056, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: We experimentally examine repeated prisoner’s dilemma with random termination, in which monitoring is imperfect and private. Our estimation indicates that a significant proportion of subjects follow generous tit-for-tat strategies, straightforward extensions of tit-for-tat. However, the observed retaliating policies are inconsistent with the generous tit-for-tat equilibria. Contrary to the theory, subjects tend to retaliate more with high accuracy than with low accuracy. Specifically, 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.

New Economics Papers: this item is included in nep-exp and nep-gth
Date: 2017-07
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Related works:
Working Paper: Accuracy and Retaliation in Repeated Games with Imperfect Private Monitoring: Experiments and Theory (2016) Downloads
Working Paper: Accuracy and Retaliation in Repeated Games with Imperfect Private Monitoring: Experiments and Theory (2016) Downloads
Working Paper: Accuracy and Retaliation in Repeated Games with Imperfect Private Monitoring:Experiments and Theory (2016) Downloads
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