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

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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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Paper provided by Brown University, Department of Economics in its series Working Papers with number 2002-20.

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Date of creation: 2002
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Handle: RePEc:bro:econwp:2002-20

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Postal: Department of Economics, Brown University, Providence, RI 02912

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