Rationality and Cooperation

Ali Moghaddasi Kelishomi, Daniel Sgroi and Andis Sofianos
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Ali Moghaddasi Kelishomi: Loughborough University
Daniel Sgroi: University of Warwick
Andis Sofianos: Durham University

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: How does rationality shape cooperation in strategic settings? We study this question in a laboratory experiment that links individual rationality, measured by consistency with the generalized axiom of revealed preference, to behaviour in an indefinitely repeated Prisoner’s Dilemma. Participants are grouped by pre-measured rationality before interacting repeatedly. We find that higher rationality substantially increases cooperation and payoffs. This effect operates through a novel mechanism: more rational individuals make fewer implementation errors when executing their intended strategies, thereby sustaining cooperative outcomes. By contrast, higher cognitive ability also promotes cooperation and higher payoffs, but through a distinct channel—reducing strategic errors in responding optimally to others’ actions. Our results provide the first experimental evidence linking rationality to cooperation via decision-making errors, and clarify the distinct roles of rationality and intelligence in shaping strategic behaviour. Together, the findings offer a unified account of how cognitive constraints affect cooperation in repeated games

Keywords: Repeated Prisoners Dilemma; Cooperation; Rationality; Intelligence; Learning; Strategy Errors JEL codes: C73; C91; C92; D83 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1630

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