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Monitoring Accuracy and Retaliation in Infinitely Repeated Games with Imperfect Private Monitoring: Theory and Experiments

Author

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  • Hitoshi Matsushima

    (Faculty of Economics, University of Tokyo)

  • Tomohisa Toyama

    (Faculty of Engineering, Kogakuin University)

Abstract

This paper experimentally examines infinitely repeated prisoners' dilemma games with imperfect private monitoring and random termination where the probability of termination is very low. Laboratory subjects make the cooperative action choices quite often, and make the cooperative action choice when monitoring is accurate more often than when it is inaccurate. Our experimental results, however, indicate that they make the cooperative action choice much less often than the game theory predicts. The subjects' naïveté and social preferences concerning reciprocity prevent the device of regime shift between the reward and punishment phases from functioning in implicit collusion.

Suggested Citation

  • Hitoshi Matsushima & Tomohisa Toyama, 2011. "Monitoring Accuracy and Retaliation in Infinitely Repeated Games with Imperfect Private Monitoring: Theory and Experiments," CIRJE F-Series CIRJE-F-795, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2011cf795
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2011/2011cf795.pdf
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    References listed on IDEAS

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    Cited by:

    1. Yutaka Kayaba & Hitoshi Matsushima & Tomohisa Toyama, 2016. "Accuracy and Retaliation in Repeated Games with Imperfect Private Monitoring:Experiments and Theory," CIRJE F-Series CIRJE-F-1004, CIRJE, Faculty of Economics, University of Tokyo.
    2. Masaki Aoyagi & V. Bhaskar & Guillaume R. Frechette, 2015. "The Impact of Monitoring in Infinitely Repeated Games: Perfect, Public, and Private," ISER Discussion Paper 0942, Institute of Social and Economic Research, Osaka University.
    3. Yutaka Kayaba & Hitoshi Matsushima & Tomohisa Toyama, 2017. "Accuracy and Retaliation in Repeated Games with Imperfect Private Monitoring: Experiments and Theory (Revised version of F-381)," CARF F-Series CARF-F-414, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.

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