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

Listed author(s):
  • Yutaka Kayaba

    (Hitotsubashi Institute for Advanced Study, Hitotsubashi University)

  • Hitoshi Matsushima

    (Faculty of Economics, The University of Tokyo)

  • Tomohisa Toyama

    (Division of Liberal Arts, Kogakuin University)

We experimentally examine repeated prisoners' dilemma with random termination, where monitoring is imperfect and private. Our estimation indicates that a significant proportion of subjects follow generous Tit-For-Tat (g-TFT) strategies, straightforward extensions of Tit-For-Tat. However, the observed retaliating policies are inconsistent with the g-TFT equilibria. Contrarily to the theory, subjects tend to retaliate more with high accuracy than with low accuracy. They tend to retaliate more than the theory predicts with high accuracy, while they tend to retaliate lesser with low accuracy. In order to describe these results as unique equilibrium, we demonstrate an alternative theory that incorporates naïveté and reciprocity.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2016/2016cf1004.pdf
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-1004.

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Length: 67 pages
Date of creation: Mar 2016
Handle: RePEc:tky:fseres:2016cf1004
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