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Payment schemes for finitely repeated Prisoner’s Dilemma games

Author

Listed:
  • Elena M. Parilina

    (Saint Petersburg State University)

  • Alena Pisareva

    (Saint Petersburg State University)

  • Georges Zaccour

    (GERAD, HEC Montréal)

Abstract

In the paper we consider finitely repeated Prisoner’s Dilemma and propose the method of sustaining cooperation based on the $$\varepsilon$$ ε -equilibrium in limited retaliation behavior strategies. The main feature of this strategy is that the punishment of a deviated player does not necessarily last until the end of the game. The duration of punishment depends on the stage when deviation happens and it is not uniquely defined. We propose two payment schemes along the cooperative trajectory to sustain cooperation based on limited retaliation strategies. If the payments in the game are organized following these schemes, when they exist, then players have no incentive to deviate and cooperation is sustainable against individual deviations.

Suggested Citation

  • Elena M. Parilina & Alena Pisareva & Georges Zaccour, 2025. "Payment schemes for finitely repeated Prisoner’s Dilemma games," Theory and Decision, Springer, vol. 99(1), pages 461-490, September.
    • Handle: RePEc:kap:theord:v:99:y:2025:i:1:d:10.1007_s11238-025-10048-w
    DOI: 10.1007/s11238-025-10048-w
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