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God Does Not Play Dice, but Do We?

Author

Listed:
  • Backhaus, Teresa

    (WZB)

  • Breitmoser, Yves

    (HU Berlin)

Abstract

When do we cooperate and why? This question concerns one of the most persistent divides between \"theory and practice\", between predictions from game theory and results from experimental studies. For about 15 years, theoretical analyses predict completely-mixed \"behavior\" strategies, i.e. strategic randomization rendering \"when\" and \"why\" questions largely moot, while experimental analyses seem to consistently identify pure strategies, suggesting long-run interactions are deterministic. Reanalyzing 145,000 decisions from infinitely repeated prisoner\'s dilemma experiments, and using data-mining techniques giving pure strategies the best possible chance, we conclude that subjects play semi-grim behavior strategies similar to those predicted by theory.

Suggested Citation

  • Backhaus, Teresa & Breitmoser, Yves, 2018. "God Does Not Play Dice, but Do We?," Rationality and Competition Discussion Paper Series 96, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:96
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    Cited by:

    1. Dvorak, Fabian & Fehrler, Sebastian, 2018. "Negotiating Cooperation under Uncertainty: Communication in Noisy, Indefinitely Repeated Interactions," IZA Discussion Papers 11897, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    repeated game; behavior; tit-for-tat mixed strategy; memory; belief-free equilibrium; laboratory experiment;
    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
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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