Equilibrium selection in the repeated Prisoner's Dilemma : Axiomatic approach and experimental evidence

Spagnolo, GiancarloStockholm School of Economics,Handelshögskolan i Stockholm (författare)

LIBRIS-ID:oai:hhs.se:1155120700006056
https://research.hhs.se/esploro/outputs/journalArticle/Equilibrium-selection-in-the-repeated-Prisoners/991001480506706056URI
https://doi.org/10.1257/mic.3.3.164DOI

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)

Ingår i:American Economic Journal: Microeconomics: American Economic Association3:3, s. 164-1921945-76691945-7685

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