Strategy Elicitation in Symmetric Real Time Trust Dilemmas
Posted: 16 Oct 2004 Last revised: 19 Feb 2011
Date Written: August 9, 2004
We report the results of trust dilemmas that are modeled as non-cooperative n-person games evolving over time. As long as all the n players continue cooperating, their potential payoff increases exponentially over time. Simultaneously, the temptation to defect increases too, as the player who is the first to defect receives the present value of the payoff function whereas each of the other n-1 players receives only a fraction of this value. We report the results of an experiment in which population members are randomly assigned to groups on each round, and each group member specifies her stopping time before the round outcome is revealed. Our results show that when players can signal their intention to cooperate by sacrificing present earnings for possible future gain, some exercise this option. By doing so, they succeed in stopping the slow decline in the mean population cooperation level observed under the typical decision method that does not allow for signaling.
Keywords: Trust dilemmas, strategy method, signaling, cooperation
JEL Classification: C72, C92, D81
Suggested Citation: Suggested Citation