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Cooperation under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games

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  • Pedro Dal B�

Abstract

While there is an extensive literature on the theory of infinitely repeated games, empirical evidence on how "the shadow of the future" affects behavior is scarce and inconclusive. I simulate infinitely repeated prisoner's dilemma games in the lab with a random continuation rule. The experimental design represents an improvement over the existing literature by including sessions with finite repeated games as controls and a large number of players per session (which allows for learning without contagion effects). I find that the shadow of the future matters not only by significantly reducing opportunistic behavior, but also because its impact closely follows theoretical predictions.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 95 (2005)
Issue (Month): 5 (December)
Pages: 1591-1604

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Handle: RePEc:aea:aecrev:v:95:y:2005:i:5:p:1591-1604

Note: DOI: 10.1257/000282805775014434
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