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Cooperation in an overlapping generations experiment

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  • Offerman, T.J.S.

    (Tilburg University)

  • Potters, J.J.M.

    (Tilburg University)

  • Verbon, H.A.A.

    (Tilburg University)

Abstract

Recent theoretical work shows that folk theorems can be developed for infiniteoverlapping generations games. Cooperation in such games can be sustained as aNash equilibrium. Besides the efficient cooperative equilibrium there is alsothe inefficient non-cooperative equilibrium. This paper investigatesexperimentally whether cooperation actually occurs in a simple overlappinggenerations game. Subjects both play the game and formulate full strategies. Inour base-line treatment subjects fail to exploit the intertemporal structure ofthe game. When we provide subjects with a recommendation to play a (subgameperfect) grim trigger strategy, a substantial part of the population developstrigger-like strategies. However, a remaining group of unconditional defectorsprevents the cooperative outcome to evolve.

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Bibliographic Info

Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-86814.

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Date of creation: 2001
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Publication status: Published in Games and Economic Behavior (2001) v.36, p.264-275
Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-86814

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Web page: http://www.tilburguniversity.edu/

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  1. Alesina, Alberto & Spear, Stephen E., 1988. "An overlapping generations model of electoral competition," Journal of Public Economics, Elsevier, vol. 37(3), pages 359-379, December.
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  16. Smith, Lones, 1992. "Folk theorems in overlapping generations games," Games and Economic Behavior, Elsevier, vol. 4(3), pages 426-449, July.
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