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Patience or Fairness? Analyzing Social Preferences in Repeated Games

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  • John Duffy

    ()
    (Department of Economics, University of Pittsburgh, Pittsburgh, PA 15260, USA)

  • Félix Muñoz-García

    ()
    (School of Economic Sciences, Washington State University, Pullman, WA 99164, USA)

Abstract

This paper investigates how the introduction of social preferences affects players’ equilibrium behavior in both the one-shot and the infinitely repeated version of the Prisoner’s Dilemma game. We show that fairness concerns operate as a ”substitute” for time discounting in the infinitely repeated game, as fairness helps sustain cooperation for lower discount factors. In addition, such cooperation can be supported under larger parameter values if players are informed about each others’ social preferences than if they are uninformed. Finally, our results help to identify conditions under which cooperative behavior observed in recent experimental repeated games can be rationalized using time preferences alone (patience) or a combination of time and social preferences (fairness).

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Bibliographic Info

Article provided by MDPI, Open Access Journal in its journal Games.

Volume (Year): 3 (2012)
Issue (Month): 1 (March)
Pages: 56-77

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Handle: RePEc:gam:jgames:v:3:y:2012:i:1:p:56-77:d:16780

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Related research

Keywords: prisoner’s dilemma; repeated games; inequity aversion; time discounting; social preferences;

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References

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  3. Oechssler, Jörg, 2011. "Finitely repeated games with social preferences," Working Papers 0515, University of Heidelberg, Department of Economics.
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  24. Rabin, Matthew, 1997. "Fairness in Repeated Games," Department of Economics, Working Paper Series qt0nz5b4mb, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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Citations

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Cited by:
  1. John Duffy & Felix Munoz-Garcia, 2010. "Signaling Concerns about Fairness: Cooperation under Uncertain Social Preferences," Working Papers 2010-19, School of Economic Sciences, Washington State University.
  2. Oechssler, Jörg, 2011. "Finitely repeated games with social preferences," Working Papers 0512, University of Heidelberg, Department of Economics.
  3. Hitoshi Matsushima & Tomomi Tanaka & Tomohisa Toyama, 2013. "Behavioral Approach to Repeated Games with Private Monitoring," CIRJE F-Series CIRJE-F-879, CIRJE, Faculty of Economics, University of Tokyo.
  4. John Duffy & Felix Munoz-Garcia, 2012. "Cooperation and Signaling with Uncertain Social Preferences," Working Papers 491, University of Pittsburgh, Department of Economics, revised May 2013.

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