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Slow to Anger and Fast to Forgive: Cooperation in an Uncertain World

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  • Drew Fudenberg
  • David G. Rand
  • Anna Dreber

Abstract

We study the experimental play of the repeated prisoner's dilemma when intended actions are implemented with noise. In treatments where cooperation is an equilibrium, subjects cooperate substantially more than in treatments without cooperative equilibria. In all settings there was considerable strategic diversity, indicating that subjects had not fully learned the distribution of play. Furthermore, cooperative strategies yielded higher payoffs than uncooperative strategies in the treatments with cooperative equilibria. In these treatments successful strategies were "lenient" in not retaliating for the first defection, and many were "forgiving" in trying to return to cooperation after inflicting a punishment. (JEL C72, C73, D81)

Suggested Citation

  • Drew Fudenberg & David G. Rand & Anna Dreber, 2012. "Slow to Anger and Fast to Forgive: Cooperation in an Uncertain World," American Economic Review, American Economic Association, vol. 102(2), pages 720-749, April.
  • Handle: RePEc:aea:aecrev:v:102:y:2012:i:2:p:720-49
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    References listed on IDEAS

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    More about this item

    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
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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