Strategy Elicitation in Symmetric Real Time Trust Dilemmas

Posted: 16 Oct 2004 Last revised: 19 Feb 2011

See all articles by Ryan O. Murphy

Ryan O. Murphy

University of Zurich - Department of Economics

Amnon Rapoport

University of Arizona - Eller College of Management

James E. Parco

Colorado College

Date Written: August 9, 2004

Abstract

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

Murphy, Ryan O. and Rapoport, Amnon and Parco, Jim, Strategy Elicitation in Symmetric Real Time Trust Dilemmas (August 9, 2004). Available at SSRN: https://ssrn.com/abstract=605267

Ryan O. Murphy (Contact Author)

University of Zurich - Department of Economics ( email )

Z├╝rich
Switzerland

Amnon Rapoport

University of Arizona - Eller College of Management ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
520-621-9325 (Phone)
520-621-4171 (Fax)

Jim Parco

Colorado College ( email )

Department of Economics and Business
14 E. Cache la Poudre St.
Colorado Springs, CO 80903
United States
719-389-6416 (Phone)
719-389-6927 (Fax)

HOME PAGE: http://www.coloradocollege.edu/dept/EC/parco.asp

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