Breakdown of Cooperation in Iterative Real-Time Trust Dilemmas
Ryan O. Murphy
ETH Zurich, Chair of Decision Theory and Behavioral Game Theory
University of Arizona - Eller College of Management
James E. Parco
Experimental Economics, Vol. 9, 2006
We study a class of trust dilemmas with symmetric players that evolve in real-time. In these games, as long as all the n players continue to cooperate, the payoff function increases exponentially over time. Simultaneously, however, the temptation to defect also increases at the same rate. The first player to defect receives the present value of the payoff function whereas each of the other n-1 players only receives a fraction d of that player's payoff. We report the results of an iterated trust dilemma that varies the values of n and d in a between-subjects design. In all cases, trust-based cooperation breaks down in the population over iterations of the stage game with the rate of breakdown sharply increasing in n and slowly decreasing in d.
Number of Pages in PDF File: 20
Keywords: Centipede game, population dynamics, cooperation, trust dilemmas
JEL Classification: C72, C92, D81Accepted Paper Series
Date posted: July 15, 2006 ; Last revised: August 25, 2008
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