The breakdown of cooperation in iterative real-time trust dilemmas
We study a class of trust-based cooperation dilemmas that evolve in continuous time. Characteristic of these dilemmas is that as long as all n players continue to cooperate, their payoffs increase monotonically over time. Simultaneously, the temptation to defect increases too, as the first player to defect terminates the interaction and receives the present value of the payoff function whereas each of the other nâˆ’1 players only receives a proportion Î´ (0 > Î´ > 1) of the defecting playerâ€™s payoff. We introduce a novel experimental institution that we call the Real-Time Trust Game (RTTG) to examine this class of interactions. We then report the results from an iterated RTTG in which the values of n and Î´ are varied in a between-subjects design. In all conditions, cooperation breaks down in the population over iterations of the game. The rate of breakdown sharply increases as n increases and more slowly decreases as Î´ increases. Copyright Economic Science Association 2006
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Guth, Werner & Ockenfels, Peter & Wendel, Markus, 1997. "Cooperation based on trust. An experimental investigation," Journal of Economic Psychology, Elsevier, vol. 18(1), pages 15-43, February.
- Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
- Camerer, Colin & Weigelt, Keith, 1988. "Experimental Tests of a Sequential Equilibrium Reputation Model," Econometrica, Econometric Society, vol. 56(1), pages 1-36, January.
- Güth, W. & Kliemt, H., 1993.
"Competition or Co-Operation,"
1993-39, Tilburg University, Center for Economic Research.
- P. Reny, 2010.
"Common Belief and the Theory of Games with Perfect Information,"
Levine's Working Paper Archive
386, David K. Levine.
- Reny Philip J., 1993. "Common Belief and the Theory of Games with Perfect Information," Journal of Economic Theory, Elsevier, vol. 59(2), pages 257-274, April.
- McKelvey, Richard D & Palfrey, Thomas R, 1992. "An Experimental Study of the Centipede Game," Econometrica, Econometric Society, vol. 60(4), pages 803-36, July.
- Jim Engle-Warnick & Robert L. Slonim, 2001.
"The Fragility and Robustness of Trust,"
Economics Series Working Papers
2001-W15, University of Oxford, Department of Economics.
- Burnham, Terence & McCabe, Kevin & Smith, Vernon L., 2000. "Friend-or-foe intentionality priming in an extensive form trust game," Journal of Economic Behavior & Organization, Elsevier, vol. 43(1), pages 57-73, September.
- Aumann, Robert J., 1995. "Backward induction and common knowledge of rationality," Games and Economic Behavior, Elsevier, vol. 8(1), pages 6-19.
When requesting a correction, please mention this item's handle: RePEc:kap:expeco:v:9:y:2006:i:2:p:147-166. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.