Equilibrium Selection in the Repeated Prisoner's Dilemma: Axiomatic Approach and Experimental Evidence
2011 ◽
Vol 3
(3)
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pp. 164-192
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Keyword(s):
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)
Keyword(s):
2007 ◽
Vol 60
(2)
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pp. 287-306
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2004 ◽
Vol 30
(9)
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pp. 1175-1185
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1999 ◽
Vol 30
(2/3)
◽
pp. 179-193
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2016 ◽
Vol 63
(5)
◽
pp. 263-277
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