Cooperation Under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games

Posted: 5 Jun 2006

See all articles by Pedro Dal Bo

Pedro Dal Bo

Brown University - Department of Economics

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Abstract

While there is an extensive literature on the theory of infinitely repeated games, empirical evidence on how the shadow of the future affects behavior is scarce and inconclusive. I simulate infinitely repeated prisoner's dilemma games in the lab with a random continuation rule. The experimental design represents an improvement over the existing literature by including sessions with finite repeated games as controls and a large number of players per session (which allows for learning without contagion effects). I find that the shadow of the future not only matters by significantly reducing opportunistic behavior, but also that its impact closely follows theoretical predictions.

Keywords: Cooperation, repeated games

JEL Classification: C72, C73, C91, C92

Suggested Citation

Dal Bo, Pedro, Cooperation Under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games. American Economic Review Vol. 95, No. 5, December 2005, Available at SSRN: https://ssrn.com/abstract=906106

Pedro Dal Bo (Contact Author)

Brown University - Department of Economics ( email )

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HOME PAGE: http://www.econ.brown.edu/fac/Pedro_Dal_Bo/

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