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  • Spagnolo, Giancarlo, et al. (author)
  • Equilibrium selection in the repeated Prisoner's Dilemma : Axiomatic approach and experimental evidence
  • 2011
  • In: American Economic Journal: Microeconomics. - : American Economic Association. - 1945-7669 .- 1945-7685. ; 3:3, s. 164-192
  • Journal article (peer-reviewed)abstract
    • We propose an axiomatic approach for equilibrium selection in the discounted, infinitely repeated symmetric Prisoner's Dilemma. Our axioms characterize a unique selection criterion that is also useful as a tool for applied comparative statics exercises as it results in a critical discount factor δ* strictly larger than δ, the standard criterion that has often been used in applications. In an experimental test we find a strong predictive power of our proposed criterion. For parameter changes where the standard and our criterion predict differently, changes in observed cooperation follow predictions based on δ*. (JEL C72, C73, C92, D81)
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