Optimization Incentives in Dilemma Games with Strategic Complementarity

33 Pages Posted: 8 May 2020

See all articles by Johannes (Jan) J. M. Potters

Johannes (Jan) J. M. Potters

Tilburg University - CentER

S. Suetens

Tilburg University - Department of Economics; Tilburg University - Tilburg Institute for Behavioral Economics Research (TIBER); Tilburg Law and Economics Center (TILEC); Centre for Economic Policy Research (CEPR)

Date Written: April 2020

Abstract

We examine whether optimization incentives --- incentives to best-respond --- have an effect on behavior in finitely repeated two-player dilemma games with strategic complements. We run an experiment in which we increase optimization incentives in two different ways compared to a baseline treatment. In the first treatment, the increase in optimization incentives is created by an increase in payoffs on the best-response curve, while its slope remains unchanged. In the second treatment, the increase in optimization incentives takes the form of an increase in the slope of the best-response curve, while best-response payoffs remain unchanged. We find that the impact of optimization incentives is overshadowed by the effect of the slope of the best-response curve. Although an increase in optimization incentives leads subjects to best-respond more frequently when the best-response curve is relatively flat, it leads to more cooperative behavior if it is accompanied by an increase in the slope of the best-response function.

Keywords: Cooperation, Experiments, optimization incentives, repeated game, strategic complementarity

JEL Classification: C91, D01, D74

Suggested Citation

Potters, Johannes (Jan) J. M. and Suetens, S., Optimization Incentives in Dilemma Games with Strategic Complementarity (April 2020). CEPR Discussion Paper No. DP14595, Available at SSRN: https://ssrn.com/abstract=3594217

Johannes (Jan) J. M. Potters (Contact Author)

Tilburg University - CentER ( email )

Department of Economics
P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 8204 (Phone)
+31 13 466 3042 (Fax)

S. Suetens

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg University - Tilburg Institute for Behavioral Economics Research (TIBER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
25
PlumX Metrics