Abstract
AbstractThis study investigates infinitely repeated games of a prisoner’s dilemma with additive separability in which the monitoring technology is imperfect and private. Behavioral incentives indicate that a player is not only motivated by pure self-interest but also by social preference such as reciprocity, and that a player often becomes naïve and selects an action randomly due to her cognitive limitation and uncertain psychological mood as well as the strategic complexity caused by monitoring imperfection and private observation. By focusing on generous tit-for-tat strategies, we characterize a behavioral version of Nash equilibrium termed behavioral equilibrium in an accuracy-contingent manner. By eliminating the gap between theory and evidence, we show that not pure self-interest but reciprocity plays a substantial role in motivating a player to make decisions in a sophisticated manner.
Submitted Version (
Free)
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call