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A Continuous Dilemma

Author

Listed:
  • Daniel Friedman
  • Ryan Oprea

Abstract

We study prisoners' dilemmas played in continuous time with flow payoffs accumulated over 60 seconds. In most cases, the median rate of mutual cooperation is about 90 percent. Control sessions with repeated matchings over eight subperiods achieve less than half as much cooperation, and cooperation rates approach zero in one-shot sessions. In follow-up sessions with a variable number of subperiods, cooperation rates increase nearly linearly as the grid size decreases, and, with one-second subperiods, they approach continuous levels. Our data support a strand of theory that explains how capacity to respond rapidly stabilizes cooperation and destabilizes defection in the prisoner's dilemma. (JEL C72, C78, C91)

Suggested Citation

  • Daniel Friedman & Ryan Oprea, 2012. "A Continuous Dilemma," American Economic Review, American Economic Association, vol. 102(1), pages 337-363, February.
  • Handle: RePEc:aea:aecrev:v:102:y:2012:i:1:p:337-63
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    References listed on IDEAS

    as
    1. Jim Engle-Warnick & Robert Slonim, 2006. "Inferring repeated-game strategies from actions: evidence from trust game experiments," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 28(3), pages 603-632, August.
    2. Selten, Reinhard & Stoecker, Rolf, 1986. "End behavior in sequences of finite Prisoner's Dilemma supergames A learning theory approach," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 47-70, March.
    3. Pedro Dal Bó, 2005. "Cooperation under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games," American Economic Review, American Economic Association, vol. 95(5), pages 1591-1604, December.
    4. Aoyagi, Masaki & Fréchette, Guillaume, 2009. "Collusion as public monitoring becomes noisy: Experimental evidence," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1135-1165, May.
    5. Esther Hauk & Rosemarie Nagel, 2000. "Choice of partners in multiple two-person prisoner's dilemma games: An experimental study," Economics Working Papers 487, Department of Economics and Business, Universitat Pompeu Fabra.
    6. Simon, Leo K & Stinchcombe, Maxwell B, 1989. "Extensive Form Games in Continuous Time: Pure Strategies," Econometrica, Econometric Society, vol. 57(5), pages 1171-1214, September.
    7. repec:wsi:wschap:9789812818478_0011 is not listed on IDEAS
    8. Drew Fudenberg & Eric Maskin, 2008. "The Folk Theorem In Repeated Games With Discounting Or With Incomplete Information," World Scientific Book Chapters,in: A Long-Run Collaboration On Long-Run Games, chapter 11, pages 209-230 World Scientific Publishing Co. Pte. Ltd..
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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    This item is featured on the following reading lists or Wikipedia pages:
    1. A Continous Dilemma (AER 2012) in ReplicationWiki

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