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It’s Payback Time: New Insights on Cooperation in the Repeated Prisoners’ Dilemma

Author

Listed:
  • Bigoni, Maria

    (University of Bologna)

  • Casari, Marco

    (University of Bologna)

  • Salvanti, Andrea

    (Universitat Pompeu Fabra)

  • Skrzypacz, Andrzej

    (Stanford GSB)

  • Spagnolo, Giancarlo

    (Stockholm University)

Abstract

In an experiment on the repeated prisoner’s dilemma where intended actions are implemented with noise, Fudenberg et al. (2012) observe that non-equilibrium strategies of the "tit-for-tat" family are largely adopted. Furthermore, they do not find support for risk dominance of TFT as a determinant of cooperation. This comment introduces the "Payback" strategy, which is similar to TFT but is sustainable in equilibrium. Using the data from the original article, we show that Payback captures most of the empirical support previously attributed to TFT, and that the risk dominance criterion based on Payback can explain the observed cooperation patterns.

Suggested Citation

  • Bigoni, Maria & Casari, Marco & Salvanti, Andrea & Skrzypacz, Andrzej & Spagnolo, Giancarlo, 2022. "It’s Payback Time: New Insights on Cooperation in the Repeated Prisoners’ Dilemma," IZA Discussion Papers 15023, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15023
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    References listed on IDEAS

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    Cited by:

    1. Maximilian Schaefer, 2022. "On the Emergence of Cooperation in the Repeated Prisoner's Dilemma," Papers 2211.15331, arXiv.org, revised Feb 2023.

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    More about this item

    Keywords

    asymmetric strategies; imperfect monitoring; indefinitely repeated games; risk dominance; strategic risk;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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