The Evolution of Cooperation: The Role of Costly Strategy Adjustments

Romero, Julian, and Yaroslav Rosokha. "The Evolution of Cooperation: The Role of Costly Strategy Adjustments." American Economic Journal: Microeconomics 11, no. 1 (2019): 299-328.

38 Pages Posted: 8 Jul 2016 Last revised: 25 Feb 2020

See all articles by Julian Romero

Julian Romero

University of Arizona - Eller College of Management

Yaroslav Rosokha

Purdue University - Krannert School of Management

Date Written: June 30, 2016

Abstract

We study the evolution of cooperation in the indefinitely repeated prisoner's dilemma when it is costly for players to adjust their strategy. Our experimental interface allows subjects to design a comprehensive strategy that then selects actions for them in every period. We conduct lab experiments in which subjects can adjust their strategies during a repeated game but may incur a cost for doing so. We find three main results. First, subjects learn to cooperate more when adjustments are costless than when they are costly. Second, subjects make more adjustments to their strategies when adjustments are costless, but they still make adjustments even when they are costly. Finally, we find that cooperative strategies emerge over time when adjustments are costless but not when adjustments are costly. These results highlight that within-game experimentation and learning are critical to the rise of cooperative behavior. We provide simulations based on an evolutionary algorithm to support these results.

Keywords: Indefinitely Repeated Games, Prisoner's Dilemma, Experiments, Cooperation, Strategies

JEL Classification: C72, C92, M53

Suggested Citation

Romero, Julian and Rosokha, Yaroslav, The Evolution of Cooperation: The Role of Costly Strategy Adjustments (June 30, 2016). Romero, Julian, and Yaroslav Rosokha. "The Evolution of Cooperation: The Role of Costly Strategy Adjustments." American Economic Journal: Microeconomics 11, no. 1 (2019): 299-328., Available at SSRN: https://ssrn.com/abstract=2805689 or http://dx.doi.org/10.2139/ssrn.2805689

Julian Romero

University of Arizona - Eller College of Management ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States

Yaroslav Rosokha (Contact Author)

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

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