Cooperation Under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games
Posted: 5 Jun 2006
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: Suggested Citation