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Strategic complexity and cooperation: An experimental study

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  • Jones, Matthew T.

Abstract

This study investigates whether cooperation in an indefinitely repeated prisoner's dilemma is sensitive to the complexity of cooperative strategies. An experimental design which allows manipulations of the complexity of these strategies by making either the cooperate action or the defect action state-dependent is used. Subjects are found to be less likely to use a cooperative strategy and more likely to use a simpler selfish strategy when the complexity of cooperative strategies is increased. The robustness of this effect is supported by the finding that cooperation falls even when the defect action is made state-dependent, which increases the complexity of punishment-enforced cooperative strategies. A link between subjects’ standardized test scores and the likelihood of cooperating is found, indicating that greater cognitive ability makes subjects more likely to use complex strategies.

Suggested Citation

  • Jones, Matthew T., 2014. "Strategic complexity and cooperation: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 352-366.
  • Handle: RePEc:eee:jeborg:v:106:y:2014:i:c:p:352-366
    DOI: 10.1016/j.jebo.2014.07.005
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    Cited by:

    1. Kai Duttle & Keigo Inukai, 2015. "Complexity Aversion: Influences of Cognitive Abilities, Culture and System of Thought," Economics Bulletin, AccessEcon, vol. 35(2), pages 846-855.
    2. Kiss, H.J. & Rodriguez-Lara, I. & Rosa-García, A., 2016. "Think twice before running! Bank runs and cognitive abilities," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 64(C), pages 12-19.
    3. Ji Yong Lee & Rodolfo M. Nayga, Jr & Cary Deck & Andreas Drichoutis, 2017. "Cognitive Ability and Bidding Behavior in Second Price Auctions: An Experimental Study," Working Papers 2017-3, Agricultural University of Athens, Department Of Agricultural Economics.
    4. Duffy, Sean & Naddeo, JJ & Owens, David & Smith, John, 2016. "Cognitive load and mixed strategies: On brains and minimax," MPRA Paper 71878, University Library of Munich, Germany.
    5. Al-Ubaydli, Omar & Jones, Garett & Weel, Jaap, 2016. "Average player traits as predictors of cooperation in a repeated prisoner's dilemma," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 64(C), pages 50-60.
    6. Allred, Sarah & Duffy, Sean & Smith, John, 2016. "Cognitive load and strategic sophistication," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 162-178.
    7. Juan M. Benito-Ostolaza & Penélope Hernández & Juan A. Sanchis-Llopis, 2015. "Are individuals with higher cognitive ability expected to play more strategically?," Working Papers 1507, Department of Applied Economics II, Universidad de Valencia.
    8. Benito-Ostolaza, Juan M. & Hernández, Penélope & Sanchis-Llopis, Juan A., 2016. "Do individuals with higher cognitive ability play more strategically?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 64(C), pages 5-11.
    9. Brañas-Garza, Pablo & Smith, John, 2016. "Cognitive abilities and economic behavior," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 64(C), pages 1-4.

    More about this item

    Keywords

    Complexity; Prisoner's dilemma; Repeated game; Bounded rationality; Finite automata;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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