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Time Horizon and Cooperation in Continuous Time

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  • Maria Bigoni

    (Department of Economics, University of Bologna)

  • Marco Casari

    (Department of Economics, University of Bologna)

  • Andrzej Skrzypacz

    (Graduate School of Business, Stanford University)

  • Giancarlo Spagnolo

    (SITE, Tor Vergata, EIEF and CEPR)

Abstract

We study interactions with different durations and termination rules in a (quasi) continuous-time prisoner’s dilemma experiment. We find that cooperation is easier to achieve and sustain with deterministic horizons than with stochastic ones; end-game effects emerge, but subjects postpone them with experience; longer duration helps cooperation. Static theories for continuous-time games cannot simultaneously account for these findings and miss the evolution of behavior across supergames. We propose a simple model – based on the replicator dynamics – that proves consistent with this evidence. The analysis of strategies and an additional treatment lend further support to the proposed explanation.

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Bibliographic Info

Paper provided by Einaudi Institute for Economics and Finance (EIEF) in its series EIEF Working Papers Series with number 1116.

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Length: 60 pages
Date of creation: 2011
Date of revision: Jan 2013
Handle: RePEc:eie:wpaper:1116

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