Algorithmic Cooperation

65 Pages Posted: 21 Mar 2023 Last revised: 13 Jul 2023

See all articles by Bernhard Kasberger

Bernhard Kasberger

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)

Simon Martin

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)

Hans-Theo Normann

Heinrich Heine University Dusseldorf - Department of Economics; Max Planck Institute for Research on Collective Goods

Tobias Werner

Center for Humans and Machines / Max Planck Institute for Human Development; Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)

Date Written: July 13, 2023

Abstract

Algorithms play an increasingly important role in economic situations. Often these situations are strategic, where the artificial intelligence may or may not be cooperative. We study the determinants and forms of algorithmic cooperation in the infinitely repeated prisoner's dilemma. We run a sequence of computational experiments, accompanied by additional repeated prisoner's dilemma games played by humans in the lab. We find that the same factors that increase human cooperation largely also determine the cooperation rates of algorithms. However, algorithms tend to play different strategies than humans. Algorithms cooperate less than humans when cooperation is very risky or not incentive compatible.

Keywords: Artificial Intelligence, Cooperation, Large language models, Q-learning, Repeated Prisoner's Dilemma

JEL Classification: C72, C73, C92, D83

Suggested Citation

Kasberger, Bernhard and Martin, Simon and Normann, Hans-Theo and Werner, Tobias, Algorithmic Cooperation (July 13, 2023). Available at SSRN: https://ssrn.com/abstract=4389647 or http://dx.doi.org/10.2139/ssrn.4389647

Bernhard Kasberger (Contact Author)

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

Simon Martin

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

Hans-Theo Normann

Heinrich Heine University Dusseldorf - Department of Economics ( email )

Duesseldorf
Germany

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Tobias Werner

Center for Humans and Machines / Max Planck Institute for Human Development ( email )

Berlin
Germany

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

HOME PAGE: http://tfwerner.com

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