Cooperation and Endogenous Repetition in an Infinitely Repeated Social Dilemma: Experimental Evidence

Kamei, Kenju (2019): Cooperation and Endogenous Repetition in an Infinitely Repeated Social Dilemma: Experimental Evidence.

Abstract

Exogenously imposed infinite repetition is known to mitigate people’s uncooperative behaviors in dilemma situations with partner matching through personal enforcement. One as yet unanswered question is whether people collectively choose to interact with each other under the partner matching condition when there exists an alternative possibility under random matching. In an indefinitely repeated public goods game framework, I let subjects democratically choose whether to (i) play with pre-assigned specific others for all rounds or to (ii) play with randomly matched counterparts in every round. The experimental results revealed that most groups collectively opt for the partner matching protocol. The data also indicated that groups achieve a higher level of cooperation when they democratically select the partner matching protocol by voting, relative to when the same option is exogenously imposed. These findings imply that people’s equilibrium selection may be affected by how the basic rules of games are introduced (endogenously or exogenously). The paper provides further evidence to suggest that the positive effect of democratic decision-making is stronger when the majority voting rule, rather than the unanimity rule, is applied.

• Item Type: MPRA Paper
• Language: English
• Keywords: experiment, public goods, cooperation, dilemma, social norms, endogenous choices
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games ; Evolutionary Games ; Repeated Games; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C92 - Laboratory, Group Behavior; H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods

References

Ahn, T.K., Mark Isaac, and Timothy Salmon, 2008. “Coming and going: Experiments on endogenous group sizes for excludable public goods.” Journal of Public Economics 93(1-2): 336-51.

Aimone, Jason, Laurence Iannaccone, and Michael Makowsky, 2013. “Endogenous Group Formation via Unproductive Costs.” Review of Economic Studies 83: 1215-1236.

Andreoni, James, and John Miller, 1993. “Rational Cooperation in the Finitely Repeated Prisoner’s Dilemma: Experimental Evidence.” Economic Journal 103: 570-585.

Battaglini, Marco, Rebecca Morton, and Thomas Palfrey, 2010. “The Swing Voter’s Curse in the Laboratory.” Review of Economic Studies 77: 61-89.

Blume, Andreas, and Andreas Ortmann, 2007. “The effects of costless pre-play communication: Experimental evidence from games with Pareto-ranked equilibria.” Journal of Economic Theory 132: 274-290.

Bock, Olaf, Andreas Nicklisch, and Ingmar Baetge, 2014. “hroot: Hamburg Registration and Organization Online Tool.” European Economic Review 71: 117-120.

Camera, Gabriele, and Marco Casari, 2009. “Cooperation among Strangers under the Shadow of the Future.” American Economic Review 99: 979-1005.

Charness, Gary, and Yang Chun-Lei, 2014. “Starting Small toward Voluntary Formation of Efficient Large Groups in Public Goods Provision.” Journal of Economic Behavior & Organization 102: 119-132.

Chaudhuri, Ananish, 2011. “Sustaining Cooperation in Laboratory Public Goods Experiments: A Selective Survey of the Literature.” Experimental Economics 14: 47-83.

Cooper, Russell, Douglas DeJong, Robert Forsythe, and Thomas Ross, 1992. “Communication in Coordination Games.” Quarterly Journal of Economics 107: 739-771.

Coricelli, Giorgio, Dietmar Fehr, and Gerlinde Fellner, 2004. “Partner Selection in Public Goods Experiments.” Journal of Conflict Resolution 48(3): 356-378.

Dal Bó, Pedro, 2005. “Cooperation under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games.” American Economic Review 95: 1591-1604.

Dal Bó, Ernesto, Dal Bó, Pedro, and Erik Eyster, 2017. “The Demand for Bad Policy when Voters Underappreciate Equilibrium Effects.” Review of Economic Studies 85(2): 964-998.

Dal Bó, Pedro, Andrew Foster, and Kenju Kamei, 2015. “The Democracy Effect: a weights-based identification strategy.” working paper.

Dal Bó, Pedro, Andrew Foster, and Louis Putterman, 2010. “Institutions and Behavior: Experimental Evidence on the Effects of Democracy.” American Economic Review 100: 2205-2229.

Dal Bó, Pedro, and Guillaume Fréchette, 2011. “The evolution of cooperation in infinitely repeated games: Experimental evidence.” American Economic Review 101: 411-429.

Dal Bó, Pedro, and Guillaume Fréchette, 2018. “On the Determinants of Cooperation in Infinitely Repeated Games: A Survey.” Journal of Economic Literature 56(1): 60-114.

Duffy, John, and Jack Ochs, 2009. “Cooperative Behavior and the frequency of social interaction.” Games and Economic Behavior 66: 785-812.

Ellison, Glenn, 1994. “Cooperation in the Prisoner’s Dilemma with Anonymous Random Matching.” Review of Economic Studies 61: 567-588.

Fehr, Ernst, and Simon Gächter, 2000. “Cooperation and punishment in public goods experiments.” American Economic Review 90: 980-994.

Fehr, Ernst, and Ivo Schurtenberger, 2018. “Normative Foundations of Human Cooperation.” Nature Human Behaviour 2: 458-468.

Fehr, Ernst, and Tony Williams, 2018. “Social Norms, Endogenous Sorting and the Culture of Cooperation.” Working paper.

Feinberg, Robert, and Thomas Husted, 1993. “An experimental test of discount-rate effects on collusive behaviour in duopoly markets.” Journal of Industrial Economics 41:153-160.

Fischbacher, Urs, 2007. “z-Tree: Zurich Toolbox for Ready-made Economic Experiments.” Experimental Economics 10: 171-178.

Gächter, Simon, Felix Kölle, and Simone Quercia, 2017. “Reciprocity and the tragedies of maintaining and providing the commons.” Nature Human Behaviour 1: 650–656.

Gächter, Simon, and Elke Renner, 2010. “The effects of (incentivized) belief elicitation in public goods experiments.” Experimental Economics 13: 364-377.

Grimm, Veronika, and Friederike Mengel, 2009. “Cooperation in Viscous Populations – Experimental Evidence.” Games and Economic Behavior 66: 202-220.

Guarnaschelli, Serena, Richard McKelvey, and Thomas Palfrey, 2000. “An Experimental Study of Jury Decision Rules.” American Political Science Review 94(2): 407-423.

Gürerk, Özgür, Bernd Irlenbusch, and Bettina Rockenbach, 2006. “The Competitive Advantage of Sanctioning Institutions.” Science 312: 108-110.

Kamei, Kenju, 2016. “Democracy and Resilient Pro-social Behavioral Change: An Experimental Study.” Social Choice and Welfare 47: 359-378.

Kamei, Kenju, 2017. “Endogenous Reputation Formation under the Shadow of the Future.” Journal of Economic Behavior & Organization 142: 189-204.

Kamei, Kenju, 2018. “Promoting Competition or Helping the Less Endowed? Distributional Preferences and Collective Institutional Choices under Intra-Group Inequality.” Journal of Conflict Resolution 62 (3). 626-655.

Kamei, Kenju, and Louis Putterman, 2017. “Play it Again: Partner Choice, Reputation Building and Learning from Finitely-Repeated Dilemma Games.” Economic Journal 127(602): 1069-1095.

Kamei, Kenju, Louis Putterman, and Jean-Robert Tyran, 2015. “State or Nature? Endogenous Formal versus Informal Sanctions in the Voluntary Provision of Public Goods.” Experimental economics 18 (1): 38-65.

Kandori, Michihiro, 1992. “Social Norms and Community Enforcement.” Review of Economic Studies 59: 63-80.

Kreps, David, Paul Milgrom, John Roberts, and Robert Wilson, 1982. “Rational Cooperation in the Finitely Repeated Prisoners’ Dilemma.” Journal of Economic Theory 27: 245-252.

Ledyard, John, 1995. “Public goods: A survey of experimental research.” In J. H. Kagel and A.E. Roth (eds.), The Handbook of Experimental Economics 111-194, Princeton University Press.

Lugovskyy, Volodymyr, Daniela Puzzello, Andrea Sorensen, James Walker, and Arlington Williams, 2015. “An Experimental Study of Finitely and Infinitely Repeated Linear Public Goods Games.” working paper.

Markussen, Thomas, Louis Putterman, and Jean-Robert Tyran, 2014. “Self-Organization for Collective Action: An Experimental Study of Voting on Sanction Regimes.” Review of Economic Studies 81: 301-324.

Masclet, David, Charles Noussair, Steven Tucker, and Marie-Claire Villeval, 2003. “Monetary and Non-monetary Punishment in the Voluntary Contributions Mechanism.” American Economic Review 93: 366-380.

Murnighan, Keith, and Alvin Roth, 1983. “Expecting Continued Play in Prisoner's Dilemma Games A Test of Several Models.” Journal of Conflict Resolution 27: 279-300.

Nicklisch, Andreas, Kristoffel Grechenig, and Christian Thöni, 2016. “Information-sensitive Leviathans.” Journal of Public Economics 144: 1-13.

Page, Talbot, Louis Putterman, and Bulent Unel, 2005. “Voluntary Association in Public Goods Experiments: Reciprocity, Mimicry, and Efficiency.” Economic Journal 115(506): 1032-1053.

Putterman, Louis, Jean-Robert Tyran, and Kenju Kamei, 2011. “Public Goods and Voting on Formal Sanction Schemes.” Journal of Public Economics 95(9-10): 1213-1222.

Roth, Alvin, and Keith Murnighan, 1978. “Equilibrium Behavior and Repeated Play of the Prisoner’s Dilemma.” Journal of Mathematical Psychology 17: 189-198.

Schneider, Frédéric, and Roberto Weber, 2013. “Long-Term Commitment and Cooperation.” University of Zurich Working paper No. 130.

Selten, Reinhard, and Rolf Stoecker, 1986. “End Behaviour in sequences of finite prisoner‘s dilemma supergames: a learning theory approach.” Journal of Economic Behavior & Organization 7: 47-70.

Stahl, Dale, 2013. “An experimental test of the efficacy of a simple reputation mechanism to solve social dilemmas.” Journal of Economic Behavior & Organization 94: 116-124.

Sutter, Matthias, Stefan Haigner, and Martin G. Kocher, 2010. “Choosing the Carrot or the Stick? Endogenous Institutional Choice in Social Dilemma Situations.” Review of Economic Studies 77: 1540-1566.

Tyran, Jean-Robert, and Lars P. Feld, 2006. “Achieving Compliance when Legal Sanctions are Non-deterrent.” Scandinavian Journal of Economics 108: 135-156.