American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
A Continuous Dilemma
American Economic Review
vol. 102,
no. 1, February 2012
(pp. 337–63)
Abstract
We study prisoners' dilemmas played in continuous time with flow payoffs accumulated over 60 seconds. In most cases, the median rate of mutual cooperation is about 90 percent. Control sessions with repeated matchings over eight subperiods achieve less than half as much cooperation, and cooperation rates approach zero in one-shot sessions. In follow-up sessions with a variable number of subperiods, cooperation rates increase nearly linearly as the grid size decreases, and, with one-second subperiods, they approach continuous levels. Our data support a strand of theory that explains how capacity to respond rapidly stabilizes cooperation and destabilizes defection in the prisoner's dilemma. (JEL C72, C78, C91)Citation
Friedman, Daniel, and Ryan Oprea. 2012. "A Continuous Dilemma." American Economic Review, 102 (1): 337–63. DOI: 10.1257/aer.102.1.337Additional Materials
JEL Classification
- C72 Noncooperative Games
- C78 Bargaining Theory; Matching Theory
- C91 Design of Experiments: Laboratory, Individual