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

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Author Info
Pedro Dal Bó

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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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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

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References listed on IDEAS
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Datta, Shakun & Offenberg, Jennifer, 2003. "An Experimental Examination of Competitor-Based Price Matching Guarantees," MPRA Paper 575, University Library of Munich, Germany, revised 22 Oct 2006. [Downloadable!]
  2. Timothy N Cason & Vai-Lam Mui, 2008. "Coordinating Collective Resistance Through Communication And Repeated Interaction," Monash Economics Working Papers 16/08, Monash University, Department of Economics. [Downloadable!]
  3. Gary Charness & Cheng-Zhong Qin, 2005. "Endogenous Transfers in the Prisoner's Dilemma Game: An Experimental Test Of Cooperation And Coordination," University of California at Santa Barbara, Economics Working Paper Series 01-05, Department of Economics, UC Santa Barbara. [Downloadable!]
    Other versions:
  4. Reuben, Ernesto & Suetens, Sigrid, 2009. "Revisiting Strategic versus Non-Strategic Cooperation," IZA Discussion Papers 4107, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. John Duffy & Jack Ochs, 2006. "Cooperative Behavior and the Frequency of Social Interaction," Working Papers 274, University of Pittsburgh, Department of Economics, revised Jul 2008. [Downloadable!]
    Other versions:
  6. Jack Ochs & John Duffy, 2006. "Cooperative Behavior and Social Interaction," Working Papers 234, University of Pittsburgh, Department of Economics, revised Jan 2006. [Downloadable!]
  7. Pedro Dal Bo & Guillaume R. Frechette, . "The Evolution of Cooperation in Infinitely Repeated Games: Experimental Evidence," Working Papers 2007-7, Brown University, Department of Economics. [Downloadable!]
  8. Steven Y. Wu & Brian E. Roe, 2007. "Discretionary Latitude and Relational Contracting," IZA Discussion Papers 2879, Institute for the Study of Labor (IZA). [Downloadable!]
  9. Randolph Sloof & Joep Sonnemans, 2009. "The Interaction between Explicit and Relational Incentives: An Experiment," Tinbergen Institute Discussion Papers 09-030/1, Tinbergen Institute. [Downloadable!]
  10. Kaplan, Todd & Ruffle, Bradley, 2007. "Which way to cooperate," MPRA Paper 3381, University Library of Munich, Germany. [Downloadable!]
  11. Gary Charness & Garance Genicot, 2008. "Informal Risk Sharing in an Infinite-horizon Experiment," University of California at Santa Barbara, Economics Working Paper Series 09-08, Department of Economics, UC Santa Barbara. [Downloadable!]
    Other versions:
  12. David Levine, 2006. "EconomicDynamics Interviews David Levine on Experimental Economics," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 7(2), April. [Downloadable!]
  13. Pedro Dal Bó & Andrew Foster & Louis Putterman, 2008. "Institutions and Behavior: Experimental Evidence on the Effects of Democracy," NBER Working Papers 13999, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  14. Leufkens, Kasper & Peeters, Ronald, 2008. "Focal prices and price cycles in an alternating price duopoly experiment," Research Memoranda 021, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
  15. David Gill & Victoria Prowse, 2009. "A Structural Analysis of Disappointment Aversion in a Real Effort Competition," Economics Series Working Papers 448, University of Oxford, Department of Economics. [Downloadable!]
  16. Leufkens, Kasper & Peeters, Ronald, 2008. "Price dynamics and collusion under short-run price commitments," Research Memoranda 052, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
  17. John Duffy & Felix Munoz-Garcia, 2009. "Patience or Fairness? Analyzing Social Preferences in Repeated Games," Working Papers 383, University of Pittsburgh, Department of Economics, revised May 2009. [Downloadable!]
  18. Michael McBride & Stergios Skaperdas, 2009. "Conflict, Settlement, and the Shadow of the Future," Working Papers 080922, University of California-Irvine, Department of Economics. [Downloadable!]
  19. Gabriele Camera & Marco Casari, 2007. "Cooperation among strangers: an experiment with indefinite interaction," Purdue University Economics Working Papers 1201, Purdue University, Department of Economics. [Downloadable!]
  20. Aliprantis, C. D. & Camera, G. & Puzzello, D., 2006. "Bilateral Matching and Latin Squares," Purdue University Economics Working Papers 1189, Purdue University, Department of Economics. [Downloadable!]
  21. Velu, C. & Iyer, S., 2008. "Returns-Based Beliefs and The Prisoner’s Dilemma," Cambridge Working Papers in Economics 0854, Faculty of Economics, University of Cambridge. [Downloadable!]
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