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Observing the Strategies Subjects Identify from Choice Data in a Repeated Prisoner's Dilemma

  • Tobie Cusson
  • Jim Engle-Warnick
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    We experimentally test the ability of subjects to identify repeated-game strategies from prisoner's dilemma choice data. In the experiments, subjects use a finite state grammar to build models to fit game histories. The histories are designed to distinguish between strategies with empirical and theoretical validity. We find that subjects successfully identify unconditional, punishment, and counting strategies. When data are observationally equivalent among different strategies, punishment strategies tend to be inferred. When inferred strategies do not fit the data, they tend to be more complex than necessary and to contain positive reciprocity and forgiveness. Our experiment provides an empirical basis for repeated-game strategies and sheds new light on play in repeated games.

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    File URL: http://www.cirano.qc.ca/files/publications/2013s-26.pdf
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    Paper provided by CIRANO in its series CIRANO Working Papers with number 2013s-26.

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    Length: 22 pages
    Date of creation: 01 Aug 2013
    Date of revision:
    Handle: RePEc:cir:cirwor:2013s-26
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    1. Jim Engle-Warnick & Robert L. Slonim, 2001. "Inferring Repeated Game Strategies From Actions: Evidence From Trust Game Experiments," Economics Series Working Papers 2001-W13, University of Oxford, Department of Economics.
    2. Kandori, Michihiro, 2002. "Introduction to Repeated Games with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 102(1), pages 1-15, January.
    3. Kalai, Ehud & Stanford, William, 1988. "Finite Rationality and Interpersonal Complexity in Repeated Games," Econometrica, Econometric Society, vol. 56(2), pages 397-410, March.
    4. M. Rabin, 2001. "Incorporating Fairness into Game Theory and Economics," Levine's Working Paper Archive 511, David K. Levine.
    5. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
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