The Importance of Being Even: Restitution and Cooperation

42 Pages Posted: 30 Apr 2024 Last revised: 1 May 2024

See all articles by Maria Bigoni

Maria Bigoni

University of Bologna - Department of Economics; IZA Institute of Labor Economics

Marco Casari

University of Bologna

Andrea Salvanti

Universitat Pompeu Fabra

Andrzej Skrzypacz

Stanford University - Stanford Graduate School of Business

Giancarlo Spagnolo

University of Rome Tor Vergata; EIEF; Centre for Economic Policy Research (CEPR); Stockholm School of Economics (SITE)

Date Written: April 26, 2024

Abstract

We study – empirically and theoretically – how restitution helps restore cooperation. After a breach, restitution strategies “propose” returning to cooperation by cooperating against defection, and condition actions on the balance between the cooperation given and received. We reanalyze experimental data from three classes of repeated games and find compelling empirical support for restitution strategies in general and for a strategy we named Payback in particular. Considering restitution strategies enables to resolve discrepancies between theory and experiments emerging from prior literature - such as the prevalent use of non-equilibrium strategies like Tit-for-tat - and questions the predominance of memory-one strategies.

Keywords: Asymmetric strategies, laboratory experiments, social dilemmas, indefinitely repeated games

JEL Classification: C72, C73, C91, D82

Suggested Citation

Bigoni, Maria and Casari, Marco and Salvanti, Andrea and Skrzypacz, Andrzej and Spagnolo, Giancarlo, The Importance of Being Even: Restitution and Cooperation (April 26, 2024). Stanford University Graduate School of Business Research Paper No.4809158, Available at SSRN: https://ssrn.com/abstract=4809158 or http://dx.doi.org/10.2139/ssrn.4809158

Maria Bigoni (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, Bologna 40126
Italy
+390512098134 (Phone)

HOME PAGE: http://https://www.unibo.it/sitoweb/maria.bigoni/en

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Marco Casari

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

Andrea Salvanti

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005
Spain

Andrzej Skrzypacz

Stanford University - Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-736-0987 (Phone)
650-725-9932 (Fax)

Giancarlo Spagnolo

University of Rome Tor Vergata ( email )

Faculty of Economics - DEF
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

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