Endogenous Monitoring Through Gossiping in an Infinitely Repeated Prisoner's Dilemma Game: Experimental Evidence

85 Pages Posted: 17 Jun 2020

See all articles by Kenju Kamei

Kenju Kamei

Durham University - Department of Economics and Finance

Artem Nesterov

Durham University - Department of Economics and Finance

Date Written: May 23, 2020

Abstract

Exogenously given reputational information is known to improve cooperation. This paper experimentally studies how people create such information through reporting of partner’s action choices, and whether the endogenous monitoring helps sustain cooperation, in an indefinitely repeated prisoner’s dilemma game. The experiment results show that most subjects report their opponents’ action choices, thereby successfully cooperating with each other, when reporting does not involve a cost. However, subjects are strongly discouraged from reporting when doing so is costly. As a result, they fail to achieve strong cooperation norms when the reported information is privately conveyed only to their next-round interaction partner. Costly reporting occurs only occasionally, even when there is a public record whereby all future partners can check the reported information. However, groups can then foster cooperation norms aided by the public record, because reported information gets gradually accumulated and becomes more informative over time. These findings suggest that the efficacy of endogenous monitoring depends on the quality of platforms that store reported information.

Keywords: experiment, cooperation, prisoner’s dilemma game, reputation, reporting, infinitely repeated game.

JEL Classification: C92, C73, D70, H41

Suggested Citation

Kamei, Kenju and Nesterov, Artem, Endogenous Monitoring Through Gossiping in an Infinitely Repeated Prisoner's Dilemma Game: Experimental Evidence (May 23, 2020). Available at SSRN: https://ssrn.com/abstract=3608749 or http://dx.doi.org/10.2139/ssrn.3608749

Kenju Kamei (Contact Author)

Durham University - Department of Economics and Finance ( email )

Durham, DH1 3HY
United Kingdom

Artem Nesterov

Durham University - Department of Economics and Finance ( email )

Durham, DH1 3HY
United Kingdom

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