Strategies for Noise, Uncertainty and Irrationality
Posted: 24 May 2011
Date Written: May 24, 2011
We explore to what extent social preferences, as measured by dictator game giving, explain cooperation in noisy repeated games. Giving is correlated with cooperation when the returns to cooperation are low, but there is no correlation when the returns to cooperation are high. There is also no correlation between dictator game giving and leniency (waiting for multiple defections before retaliating) or forgiveness (returning to cooperation after a retaliation). Furthermore, inequity aversion does not favor cooperative strategies, which are common in our data and earn high payoffs. We conclude that cooperation in repeated games is primarily motivated by long-term payoff maximization.
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