|
on Game Theory |
| By: | Sergio Currarini (University of Leicester); Francesco Feri (Royal Holloway, University of London and Università di Trieste); Bjoern Hartig (Royal Hollloway, University of London); Miguel A. Meléndez-Jiménez (University of Málaga) |
| Abstract: | We design an experiment to study how agents make use of information in networks. Agents receive payoff-relevant signals automatically shared with neighbors. We compare the use of information in different network structures, considering games in which strategies are substitute, complement and orthogonal. To study the incentives to share information across games, we also allow subjects to modify the network before playing the game. We find behavioral deviations from the theoretical prediction in the use of information, which depend on the network structure, the position in the network and the strategic nature of the game. There is also a bias toward oversharing information, which is related to risk aversion and the position in the network. |
| Keywords: | networks, experiment, information sharing, strategic complements, strategic substitutes, pairwise stability |
| JEL: | C72 C91 C92 D82 D85 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:mal:wpaper:2020-6&r=all |
| By: | LUO Chenghong, (CORE, UCLouvain and Ca’Foscoari University); MAULEON Ana, (Université Saint Louis, Bruxelles); VANNETELBOSCH Vincent, (CORE, UCLouvain) |
| Abstract: | We propose the notion of coalition-proof stability for predicting the networks that could emerge when group deviations are allowed. A network is coalition-proof stable if there exists no coalition which has a credible group deviation. A coalition is said to have a credible group deviation if there is a profitable group deviation to some network and there is no subcoalition of the deviating players which has a subsequent credible group deviation. Coalition-proof stability is ai coarsening of sotrong stability. There is no relationship between the set of coalition-proof stable networks and the set of networks induced by a coalition-proof Nash equilibrium of Myerson’s linking game. Contrary to coalition-proof stability, coalition-proof Nash equilibria of Myerson’s linking game tend to support unreasonable networks. |
| Keywords: | friendship networks; stable sets; myopic and farsighted players; assimilation; segregation |
| JEL: | A14 C70 D20 |
| Date: | 2020–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2020018&r=all |
| By: | Ning, Haokai |
| Abstract: | This paper extends the conventional literature on strategic trade policy in reciprocal dumping model to the context that involves market demand uncertainty and incomplete information. In order to highlight the role of uncertainty and incomplete information, a simple scenario with linear asymmetric demand, additive stochastic market shock, homogeneous products, and identical constant marginal costs are considered. It is shown that incomplete information at industrial level redistributes the option value associated with better information to the country with the better informed firm. As a result, both governments tend to choose tariffs over export subsidies in the Nash equilibrium of the simultaneous strategic trade policy games under complete and incomplete information. This yields a second best outcome. Moreover, we show that Nash equilibrium outcome is inferior to free-trade outcome. |
| Keywords: | Intra-industry Trade; Incomplete Information; Uncertainty; Bayesian Nash equilibrium; Tariff; Export subsidy |
| JEL: | C72 D82 F13 L13 |
| Date: | 2020–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101530&r=all |
| By: | Dietzenbacher, Bas (Department of Quantitative Economics); Sudhölter, Peter (Department of Business and Economics) |
| Abstract: | This paper formally introduces Hart-Mas-Colell consistency for general (possibly multi-valued) solutions for cooperative games with transferable utility. This notion is used to axiomatically characterize the core on the domain of convex games. Moreover, we characterize all nonempty solutions satisfying individual rationality, anonymity, scale covariance, superadditivity, weak Hart-Mas-Colell consistency, and converse Hart-Mas-Colell consistency. This family consists of (a) the Shapley value, (b) all homothetic images of the core with the Shapley value as center of homothety and with positive ratios of homothety not larger than one, and (c) their relative interiors. |
| Keywords: | Convex games; consistency; converse consistency; core; Shapley value |
| JEL: | C71 |
| Date: | 2020–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2020_009&r=all |
| By: | ZHIXIN Dai; Jiwei Zheng; Daniel J. Zizzo |
| Abstract: | We present a coordination game experiment testing the robustness of the predictive power of level-k reasoning and team reasoning in a sample of Chinese tax administrators that is matched for likely socio-economic characteristics with our student sample. We show how the incidence of coordination game play is virtually identical between Chinese tax administrators and university students. However, relatively to non-students, students are comparatively more attracted by the focal point under team reasoning when this has equal payoffs and the other outcomes do not. |
| Keywords: | external validity, non-student sample, focal points, team reasoning, level-k, coordination games |
| JEL: | C72 C78 C91 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:305138067&r=all |
| By: | Christian Ewerhart; Guang-Zhen Sun |
| Abstract: | We characterize the equilibrium set of the n-player Hirshleifer contest with homogeneous valuations. A symmetric equilibrium always exists. It necessarily corresponds to multilateral peace for sufficient noise and uses finite-support randomized strategies otherwise. Asymmetric equilibria are feasible for n≥3 contestants only, and only for sufficiently small noise. In pure strategies, any asymmetric equilibrium corresponds to one-sided dominance, but there is also a variety of payoff-inequivalent mixed-strategy equilibria for small noise. For arbitrarily small noise, at least two contestants engage in cut-throat competition, while any others become ultimately inactive. Of some conceptual interest is the observation that, for n sufficiently large, the unique equilibrium is multilateral peace. |
| Keywords: | Hirshleifer contest, Nash equilibrium, rent dissipation, difference-form contest, all-pay auction |
| JEL: | C72 D72 D74 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:361&r=all |
| By: | Delia Coculescu; Freddy Delbaen |
| Abstract: | We use the theory of cooperative games for the design of fair insurance contracts. An insurance contract needs to specify the premium to be paid and a possible participation in the benefit (or surplus) of the company. It results from the analysis that when a contract is exposed to the default risk of the insurance company, ex-ante equilibrium considerations require a certain participation in the benefit of the company to be specified in the contracts. The fair benefit participation of agents appears as an outcome of a game involving the residual risks induced by the default possibility and using fuzzy coalitions. |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2009.04408&r=all |
| By: | Ning, Haokai |
| Abstract: | This paper studies the design of trade policies in an uncertain third market with incomplete information. Governments in each of the two countries select either direct quantity controls or subsidies in an attempt to shift profits in favour of their own firms in an oligopolistic setting. It is shown that the country with firms having information disadvantage tends to choose the direct quantity control, while the country with well-informed firms would use export subsidy (export quota) when the degree of uncertainty is sufficiently high (low). |
| Keywords: | Uncertainty, incomplete information, Bayesian Nash equilibrium, strategic trade policy, Cournot competition |
| JEL: | C72 D82 F13 L13 |
| Date: | 2020–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101529&r=all |
| By: | Benoit Duvocelle; J\'anos Flesch; Hui Min Shi; Dries Vermeulen |
| Abstract: | We consider a discrete-time dynamic search game in which a number of players compete to find an invisible object that is moving according to a time-varying Markov chain. We examine the subgame perfect equilibria of these games. The main result of the paper is that the set of subgame perfect equilibria is exactly the set of greedy strategy profiles, i.e. those strategy profiles in which the players always choose an action that maximizes their probability of immediately finding the object. We discuss various variations and extensions of the model. |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2008.09653&r=all |
| By: | Ayoubi, Charles; Thurm, Boris |
| Abstract: | Why do individuals take different decisions when confronted with similar choices? This paper investigates whether the answer lies in an evolutionary process. Our analysis builds on recent work in evolutionary game theory showing the superiority of a given type of preferences, homo moralis, in fitness games with assortative matching. We adapt the classical definition of evolutionary stability to the case where individuals with distinct preferences coexist in a population. This approach allows us to establish the characteristics of an evolutionarily stable population. Then, introducing an assortment matrix for assortatively matched interactions, we prove the existence of a heterogeneous evolutionarily stable population in 2×2 symmetric fitness games under constant assortment, and we identify the conditions for its existence. Conversely to the classical setting, we find that the favored preferences in a heterogeneous evolutionarily stable population are context-dependent. As an illustration, we discuss when and how an evolutionarily stable population made of both selfish and moral individuals exists in a prisoner’s dilemma. These findings offer a theoretical foundation for the empirically observed diversity of preferences among individuals. |
| Date: | 2020–08–26 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:ucx8z&r=all |
| By: | Ning, Haokai |
| Abstract: | This paper compares the social welfare effects of tariffs and quotas as strategic trade policy instruments in an oligopolistic industry where the domestic market demand is uncertain and the policy is chosen before the uncertainty is resolved. The uncertain demand, once realized, is assumed to be available only to the domestic firm when the output game is played between domestic and foreign firms. To highlight our assertion, a simple scenario with linear demand, additive stochastic market shock, homogeneous products, and identical constant marginal costs is considered. It is shown that a tariff is superior to a quota regardless of the degree of uncertainty. Moreover, we also show that a prohibitive quota that results in autarky is always preferred to a quota at the free-trade level. |
| Keywords: | Incomplete Information; Uncertainty; Bayesian Nash equilibrium; Tariff; Quota |
| JEL: | C72 D82 F13 L13 |
| Date: | 2020–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101512&r=all |
| By: | Stefan Penczynski; Stefania Sitzia; Jiwei Zheng |
| Abstract: | This study introduces the concept of “compound games†and investigates whether the decomposition of a game – when implemented – influences behaviour. For example, we investigate whether separating battle of the sexes games into a pure coordination component and the remaining battle of the sexes component changes coordination success. The literature attributes high coordination rates in pure coordination games with focal points to team reasoning and low coordination rates in related battle of the sexes games to level-k reasoning. We find that coordination success in compound games depends on the decomposition and order of component games. |
| Keywords: | Compound games, focal points, framing, collective interest |
| JEL: | C72 C91 D90 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:305138214&r=all |
| By: | Hörner, Johannes; Klein, Nicolas |
| Abstract: | This paper considers a class of experimentation games with L´evy bandits encompassing those of Bolton and Harris (1999) and Keller, Rady and Cripps (2005). Its main result is that efficient (perfect Bayesian) equilibria exist whenever players’ payoffs have a diffusion component. Hence, the trade-offs emphasized in the literature do not rely on the intrinsic nature of bandit models but on the commonly adopted solution concept (MPE). This is not an artifact of continuous time: we prove that such equilibria arise as limits of equilibria in the discretetime game. Furthermore, it suffices to relax the solution concept to strongly symmetric equilibrium. |
| Keywords: | Two-Armed Bandit; Bayesian Learning; Strategic Experimentation; Strongly Symmetric Equilibrium. |
| Date: | 2020–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:124603&r=all |
| By: | LUO Chenghong, (CORE, UCLouvain and Ca’Foscoari University); MAULEON Ana, (Université Saint Louis, Bruxelles); VANNETELBOSCH Vincent, (CORE, UCLouvain) |
| Abstract: | We reconsider die Marti and Zenou (2017) model of friendship network formation where individuals belong to two different communities. Benefits from direct and indirect connections decay with distance while costs of forming links depend on community memberships. Individuals are now either farsighted or myopic when deciding about the friendship links they want to form. When all individuals are myopic many inefficient friendship networks (e.g. complete segregation) can arise. When the larger (smaller) community is farsighted while the smaller (larger) community is myopic, the friendsip network where the myopic community is assimilated into the farsighted community is the unique stable network when inter-community costs are large. In fact, farsightedness helps the society to avoid ending up segregated. Once inter-community costs are small enough, the coplete integration network become stable. Finally, when all individuals are farsighted, the friendship network where the smaller community ends up being assimilated into the dominant community is likely to arise. |
| Keywords: | friendship networks; stable sets; myopic and farsighted players; assimilation; segregation |
| JEL: | A14 C70 D20 |
| Date: | 2020–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2020017&r=all |
| By: | Berenice Anne Neumann |
| Abstract: | In this paper, we introduce a natural learning rule for mean field games with finite state and action space, the so-called myopic adjustment process. The main motivation for these considerations are the complex computations necessary to determine dynamic mean-field equilibria, which make it seem questionable whether agents are indeed able to play these equilibria. We prove that the myopic adjustment process converges locally towards stationary equilibria with deterministic equilibrium strategies under rather broad conditions. Moreover, for a two-strategy setting, we also obtain a global convergence result under stronger, yet intuitive conditions. |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2008.13420&r=all |
| By: | Olivier F\'eron; Peter Tankov; Laura Tinsi |
| Abstract: | We develop a tractable equilibrium model for price formation in intraday electricity markets in the presence of intermittent renewable generation. Using stochastic control theory we identify the optimal strategies of agents with market impact and exhibit the Nash equilibrium in closed form for a finite number of agents as well as in the asymptotic framework of mean field games. Our model reproduces the empirical features of intraday market prices, such as increasing price volatility at the approach of the delivery date and the correlation between price and renewable infeed forecasts, and relates these features with market characteristics like liquidity, number of agents, and imbalance penalty. |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2009.04786&r=all |
| By: | Yeon-Koo Che; Jinwoo Kim; Fuhito Kojima; Christopher Thomas Ryan |
| Abstract: | We characterize Pareto optimality via sequential utilitarian welfare maximization: a utility vector u is Pareto optimal if and only if there exists a finite sequence of nonnegative (and eventually positive) welfare weights such that $u$ maximizes utilitarian welfare with each successive welfare weights among the previous set of maximizers. The characterization can be further related to maximization of a piecewise-linear concave social welfare function and sequential bargaining among agents a la generalized Nash bargaining. We provide conditions enabling simpler utilitarian characterizations and a version of the second welfare |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2008.10819&r=all |
| By: | Bieta, Volker; Broll, Udo; Siebe, Wilfried |
| Abstract: | In this paper an extension of the well-known binomial approach to option pricing is presented. The classical question is: What is the price of an option on the risky asset? The traditional answer is obtained with the help of a replicating portfolio by ruling out arbitrage. Instead a two-person game from the Nash equilibrium of which the option price can be derived is formulated. Consequently both the underlying asset's price at expiration and the price of the option on this asset are endogenously determined. The option price derived this way turns out, however, to be identical to the classical no-arbitrage option price of the binomial model if the expiration-date prices of the underlying asset and the corresponding risk-neutral probability are properly adjusted according to the Nash equilibrium data of the game. |
| Keywords: | option pricing,game theory,Nash equilibrium |
| JEL: | G12 G13 C72 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tudcep:0320&r=all |
| By: | Mikhail Zhitlukhin |
| Abstract: | We consider a continuous-time game-theoretic model of an investment market with short-lived assets and endogenous asset prices. The first goal of the paper is to formulate a stochastic equation which determines wealth processes of investors and to provide conditions for the existence of its solution. The second goal is to show that there exists a strategy such that the logarithm of the relative wealth of an investor who uses it is a submartingale regardless of the strategies of the other investors, and the relative wealth of any other essentially different strategy vanishes asymptotically. This strategy can be considered as an optimal growth portfolio in the model. |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2008.13230&r=all |
| By: | Ruda Zhang; Roger Ghanem |
| Abstract: | Understanding collective human behavior and dynamics at urban-scale has drawn broad interest in physics, engineering, and social sciences. Social physics often adopts a statistical perspective and treats individuals as interactive elementary units,while the economics perspective sees individuals as strategic decision makers. Here we provide a microscopic mechanism of city-scale dynamics,interpret the collective outcome in a thermodynamic framework,and verify its various implications empirically. We capture the decisions of taxi drivers in a game-theoretic model,prove the existence, uniqueness, and global asymptotic stability of Nash equilibrium. We offer a macroscopic view of this equilibrium with laws of thermodynamics. With 870 million trips of over 50k drivers in New York City,we verify this equilibrium in space and time,estimate an empirical constitutive relation,and examine the learning process at individual and collective levels. Connecting two perspectives,our work shows a promising approach to understand collective behavior of subpopulations. |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2008.10775&r=all |
| By: | Jasmina Arifovic; Cars Hommes; Anita Kopányi-Peuker; Isabelle Salle |
| Abstract: | This paper provides experimental evidence on coordination within genuinely large groups that could proxy the atomistic nature of real-world markets and organizations. We use a bank-run game where the two pure-strategy equilibria “run” and “wait” can be ranked by payoff and risk-dominance and a random sequence of public announcements introduces stochastic sunspot equilibria. We find systematic group size differences that theory fails to predict. In the presence of strategic uncertainty, the behavior of small groups is uninformative of behavior in large groups: in contrast to groups of 10, large groups only coordinate on the safest but Pareto-inferior “run” strategy and never coordinate on sunspots. Our results entail a series of theoretical and experimental implications. |
| Keywords: | Financial markets; Financial stability |
| JEL: | C92 D90 G20 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:20-30&r=all |
| By: | Alexandra Belova (ECOPSY Consulting); Philippe Gagnepain (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Stéphane Gauthier (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Institute for Fiscal Studies) |
| Abstract: | We study competition in the U.S. airline industry relaxing the Nash equilibrium assumption that airlines are able to predict perfectly the behavior of their competitors. We assess empirically whether an equilibrium is more likely to occur if it is the unique rationalizable outcome. We find that equilibria of short distance routes with high traffic and low concentration are the most fragile, and low-cost companies appear detrimental to their occurrence. Our analysis is applied to the measurement of welfare gains from firms' entry, and to the characterization of the relevant market when some products are unobserved. |
| Keywords: | Rationalizability,Nash equilibrium,Cournot competition,structural model,airline industry,welfare analysis,relevant market |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-02932780&r=all |
| By: | Vaissman Guinsburg, Pedro |
| Abstract: | I study the problem of firms that disclose verifiable information to each other publicly, in the form of Blackwell Experiments, before engaging in strategic decisions. The signals designed can be either interpreted as statistical reports or as slices of physical quantities, i.e. market segments. Before the state of the world is realized, firms choose a signal policy, an estimation technique, about a private individual payoff state and then are forced to publicize the results of the investigations to all other firms before engaging in price or quantity competition. Because signals are made public, when a firm tries to assess the firm's individual payoff, it also ends up revealing the same information to her opponents. Full Disclosure enables companies to adapt to local market fundamentals at the expense of releasing crucial information to the competitors. On the other hand, Partial Revelation makes companies loose optimality of the decisions with regards to the true state of the world but enable them to commit to an aggressive policy of preclusion that increases the frequency of a favorable distribution of players actions. Whereas Partial Revelation acts as a commitment device and preclude entry in otherwise competitive markets, inducing insensitivity of the decisions with respect to local fundamentals, decentralized decision making is a dominant strategy when the profile of competitors is constant across markets or when a company cannot influence the extensive margin entry decision of the competitor with more or less disclosure of information. Since decentralization acts as a way to correlate decisions with local market fundamentals, and running one single policy in multiple states of the world acts as a commitment device to avoid competitors, I describe a trade off between commitment over a distribution of actions versus correlation with states of the world. |
| Keywords: | Information Design, Oligopoly and Market Power |
| JEL: | D43 D89 |
| Date: | 2020–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:101496&r=all |
| By: | Buccella, Domenico; Fanti, Luciano; Gori, Luca |
| Abstract: | This research analyses the firms’ strategic choice of adopting an abatement technology in an environment with pollution externalities when the government levies an emission tax to incentivise firms undertaking emission-reducing actions. A set of different Nash equilibria – ranging from dirty to green production – arises in both quantity-setting (Cournot) and price-setting (Bertrand) duopolies depending on the societal awareness towards environmental quality and the relative importance of technological progress in abatement adopted by firms. A synthesis of the main results is the following: if the awareness of the society towards a clean environment is relatively low (resp. high) and the index measuring the relative cost of abatement is relatively high (resp. low), the strategic interaction between two independent, competing and selfish (profit maximising) firms playing the abatement game leads to not to abate [NA] (resp. to abate [A]) as the Pareto efficient outcome: no conflict exists between self-interest and mutual benefit to do not undertake (resp. to undertake) emission-reducing actions. Multiple Nash equilibria or a “green” prisoner’s dilemma may also emerge in pure strategies. When the choice of adopting a green technology is a deadlock (anti-prisoner’s dilemma), the society is better off as social welfare under A is always larger than under NA because pollution and environmental damage are higher in the latter scenario. These findings suggest that living in a sustainable environment challenges the development of clean technologies through ad hoc R&D and the improvement of public education to achieve an eco-responsible attitude. |
| Keywords: | “Green” production,Abatement,Emissions tax,Cournot and Bertrand duopolies |
| JEL: | H23 L1 M5 Q58 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:636&r=all |
| By: | Saral, Ali Seyhun |
| Abstract: | In this study, we investigate conditional types and their evolution in an iterated Prisoner's Dilemma, comparing different continuation probabilities, by using a computational model. In our setting, agents are characterized by their responses to each level of cooperation in a linearly extended Prisoner's Dilemma. By using repeated simulations, we estimate the likelihood of cooperation and the conditional strategies that are likely to succeed. Our results show that, when the continuation probability is sufficiently large, full cooperation is achieved. In this case, the most successful strategies are the ones who employ an all-or-none type of conditional cooperation, followed by perfect conditional cooperators. In the intermediate levels of continuation probability, however, hump-shaped contributor types are the ones that are most likely to exist, followed by imperfect conditional cooperators. Those agents cooperate in a medium level of cooperation within themselves and each other. Our results provide an explanation for the commonly observed hump-shaped strategy and imperfect conditional cooperators in experiments. Furthermore, a potential implication of our results is that the heterogeneity of conditional strategies might stem from the diverse interaction frequencies among real-world interactions. |
| Date: | 2020–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:wcpkz&r=all |
| By: | Simon Gaechter (University of Nottingham); Kyeongtae Lee (University of Nottingham); Martin Sefton (University of Nottingham) |
| Abstract: | We examine the effect of payoff variations on cooperation in one-shot prisoner's dilemma games. We focus on three factors: risk, temptation, and efficiency, which we vary as orthogonal treatments. We find that temptation has the largest impact on cooperation. Temptation directly deters cooperation and indirectly harms cooperation by lowering beliefs about the opponent's cooperativeness. Efficiency indirectly affects cooperation through beliefs, but the magnitude of the effect is relatively small compared to temptation. Risk does not have a significant effect on cooperation. Our finding suggests that curbing the level of temptation is the most important way to improve cooperation in social dilemmas. |
| Keywords: | prisoner's dilemma, cooperation, temptation, efficiency, risk |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2020-15&r=all |