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Far but finite horizons promote cooperation in the Centipede game

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  • Krockow, Eva M.
  • Pulford, Briony D.
  • Colman, Andrew M.

Abstract

The sequential Centipede game models repeated reciprocal interaction, in which two players alternate in choosing between cooperation and defection. In an attempt to increase the game’s applicability to real-life decision contexts, we investigated the effects of game length and termination rules on cooperation in the Centipede game. We found that increasing the game length from 8 to 20 decision nodes increased cooperation, but only if the game’s end was known to participants. Games with unknown ends manifested lower cooperation levels without an endgame effect (increased defection immediately before a known end). Random game termination by the computer appeared to increase the percentage of games adhering to the Nash equilibrium outcome mandated by game theory, and generally lowered cooperation levels.

Suggested Citation

  • Krockow, Eva M. & Pulford, Briony D. & Colman, Andrew M., 2018. "Far but finite horizons promote cooperation in the Centipede game," Journal of Economic Psychology, Elsevier, vol. 67(C), pages 191-199.
    • Handle: RePEc:eee:joepsy:v:67:y:2018:i:c:p:191-199
    DOI: 10.1016/j.joep.2018.07.002
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    References listed on IDEAS

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    Cited by:

    1. Benjamin Patrick Evans & Mikhail Prokopenko, 2021. "Bounded rationality for relaxing best response and mutual consistency: The Quantal Hierarchy model of decision-making," Papers 2106.15844, arXiv.org, revised Mar 2023.
    2. Benjamin Patrick Evans & Mikhail Prokopenko, 2024. "Bounded rationality for relaxing best response and mutual consistency: the quantal hierarchy model of decision making," Theory and Decision, Springer, vol. 96(1), pages 71-111, February.

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    More about this item

    Keywords

    Centipede game; Backward induction; Endgame effect; Cooperation; Reciprocity;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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