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Risky Punishment and Reward in the Prisoner’s Dilemma

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  • Peter Duersch

    () (University of Heidelberg, Department of Economics)

  • Maros Servátka

    (University of Canterbury, Department of Economics)

Abstract

We conduct a prisoner’s dilemma experiment with a punishment/reward stage, where punishments and rewards are risky. This is compared with a risk free treatment. We find that subjects do not change their behavior in the face of risky outcomes. Additionally, we measure risk attitude and the emotions of subjects. While we find a strong influence of emotions, individual risk aversion has no effect on the decision to punish or reward. This is good news for lab experiments who abstract from risky outcomes. From the perspective of social preferences, our results provide evidence for risk neutral inclusion of other player’s payoffs in the decisionmaker’s utility function.

Suggested Citation

  • Peter Duersch & Maros Servátka, 2007. "Risky Punishment and Reward in the Prisoner’s Dilemma," Working Papers 0451, University of Heidelberg, Department of Economics, revised Sep 2007.
  • Handle: RePEc:awi:wpaper:0451
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    References listed on IDEAS

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    Cited by:

    1. Peter Duersch & Maroš Servátka, 2009. "Punishment with Uncertain Outcomes in the Prisoner’s Dilemma," Working Papers 0485, University of Heidelberg, Department of Economics.

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    Keywords

    Prisoner’s dilemma; risk; punishment; reward; emotions; experiment;

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