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The breakdown of cooperation in iterative real-time trust dilemmas

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Author Info

  • Ryan Murphy

    ()

  • Amnon Rapoport

    ()

  • James Parco

    ()

Abstract

We study a class of trust-based cooperation dilemmas that evolve in continuous time. Characteristic of these dilemmas is that as long as all n players continue to cooperate, their payoffs increase monotonically over time. Simultaneously, the temptation to defect increases too, as the first player to defect terminates the interaction and receives the present value of the payoff function whereas each of the other n−1 players only receives a proportion δ (0 > δ > 1) of the defecting player’s payoff. We introduce a novel experimental institution that we call the Real-Time Trust Game (RTTG) to examine this class of interactions. We then report the results from an iterated RTTG in which the values of n and δ are varied in a between-subjects design. In all conditions, cooperation breaks down in the population over iterations of the game. The rate of breakdown sharply increases as n increases and more slowly decreases as δ increases. Copyright Economic Science Association 2006

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File URL: http://hdl.handle.net/10.1007/s10683-006-7049-4
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Bibliographic Info

Article provided by Springer in its journal Experimental Economics.

Volume (Year): 9 (2006)
Issue (Month): 2 (June)
Pages: 147-166

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Handle: RePEc:kap:expeco:v:9:y:2006:i:2:p:147-166

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Web page: http://www.springerlink.com/link.asp?id=102888

Related research

Keywords: Centipede game; Cooperation; Population dynamics; Trust; Trust dilemmas;

References

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  1. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
  2. Aumann, Robert J., 1995. "Backward induction and common knowledge of rationality," Games and Economic Behavior, Elsevier, vol. 8(1), pages 6-19.
  3. Jim Engle-Warnick & Robert L. Slonim, 2001. "The Fragility and Robustness of Trust," Economics Papers 2001-W15, Economics Group, Nuffield College, University of Oxford.
  4. P. Reny, 2010. "Common Belief and the Theory of Games with Perfect Information," Levine's Working Paper Archive 386, David K. Levine.
  5. Gueth, W. & Kliemt, H., 1993. "Competition or Co-Operation," Discussion Paper 1993-39, Tilburg University, Center for Economic Research.
  6. McKelvey, Richard D & Palfrey, Thomas R, 1992. "An Experimental Study of the Centipede Game," Econometrica, Econometric Society, vol. 60(4), pages 803-36, July.
  7. Burnham, Terence & McCabe, Kevin & Smith, Vernon L., 2000. "Friend-or-foe intentionality priming in an extensive form trust game," Journal of Economic Behavior & Organization, Elsevier, vol. 43(1), pages 57-73, September.
  8. Camerer, Colin & Weigelt, Keith, 1988. "Experimental Tests of a Sequential Equilibrium Reputation Model," Econometrica, Econometric Society, vol. 56(1), pages 1-36, January.
  9. Guth, Werner & Ockenfels, Peter & Wendel, Markus, 1997. "Cooperation based on trust. An experimental investigation," Journal of Economic Psychology, Elsevier, vol. 18(1), pages 15-43, February.
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Citations

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Cited by:
  1. Olivier Ledoit, 2011. "Choice Democracy," ECON - Working Papers 038, Department of Economics - University of Zurich.
  2. Zacharias Maniadis, 2008. "Essays in Aggregate Information, The Media and Special Interests," Levine's Working Paper Archive 122247000000002258, David K. Levine.
  3. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 811-846, August.
    • Scheinkman, Jose A. & Soutter, Christine L. & Glaeser, Edward Ludwig & Laibson, David I., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
  4. Dimitri Dubois & Marc Willinger, 2007. "The role of players’ identification in the population on the trusting and the trustworthy behavior an experimental investigation," Working Papers 07-06, LAMETA, Universtiy of Montpellier, revised Jun 2007.
  5. Jordi Brandts & Gary Charness, 2011. "The strategy versus the direct-response method: a first survey of experimental comparisons," Experimental Economics, Springer, vol. 14(3), pages 375-398, September.

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