Can Subgame Perfect Equilibrium Threats Foster Cooperation? An Experimental Test of Finite‐Horizon Folk Theorems
12 Pages Posted: 27 Feb 2013
Date Written: April 2013
Abstract
This paper considers extended prisoners' dilemma games in which a second pure strategy equilibrium in the stage game allows for mutual cooperation in all but the last round of the finitely repeated game as an equilibrium outcome. We distinguish a strict and a weak extension of the prisoners' dilemma game in a long and a short horizon treatment. A comparison with the corresponding finitely repeated prisoners' dilemma games shows that the strict additional equilibrium increases cooperation rates while the weak does not. This result is robust to the variation of the time horizon.
JEL Classification: C73, C91
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Fairness and Retaliation: The Economics of Reciprocity
By Ernst Fehr and Simon Gächter
-
Fairness and Retaliation: The Economics of Reciprocity
By Ernst Fehr and Simon Gächter
-
Cooperation and Punishment in Public Goods Experiments
By Ernst Fehr and Simon Gächter
-
Social Norms and Welfare State Dynamics
By Assar Lindbeck, Sten Nyberg, ...
-
The Evolution of Strong Reciprocity: Cooperation in Heterogeneous Populations
By Samuel Bowles and Herbert Gintis
-
Theories of Commitment, Altruism and Reciprocity: Evidence from Linear Public Goods Games
-
Wages, Profits and Rent-Sharing
By David G. Blanchflower, Andrew J. Oswald, ...
-
Does Unmeasured Ability Explain Inter-Industry Wage Differentials?
-
More Order with Less Law: On Contract Enforcement, Trust and Crowding
By Iris Bohnet, Bruno S. Frey, ...