Who Cooperates in Repeated Games: The Role of Altruism, Inequity Aversion, and Demographics
52 Pages Posted: 16 Oct 2012 Last revised: 16 May 2014
Date Written: September 30, 2011
We explore the extent to which altruism, as measured by giving in a dictator game (DG), accounts for play in a noisy version of the repeated prisoner’s dilemma. We find that DG giving is correlated with cooperation in the repeated game when no cooperative equilibria exist, but not when cooperation is an equilibrium. Furthermore, none of the commonly observed strategies are better explained by inequity aversion or efficiency concerns than money maximization. Various survey questions provide additional evidence for the relative unimportance of social preferences. We conclude that cooperation in repeated games is primarily motivated by long-term payoff maximization and that even though some subjects may have other goals, this does not seem to be the key determinant of how play varies with the parameters of the repeated game. In particular, altruism does not seem to be a major source of the observed diversity of play.
Keywords: cooperation, prisoner’s dilemma, altruism, social preferences, dictator game, inequity aversion, survey
JEL Classification: C72, C91, D03
Suggested Citation: Suggested Citation