Abstract
Cooperative behavior is often assumed to depend on individuals' characteristics, such as altruism and reasoning ability. Evidence is mixed about what the precise impact of these characteristics is, as the subjects of study are generally randomly paired, generating a heterogeneous mix of the two characteristics. In this study we ex-ante create four different groups of subjects by factoring their higher or lower than the median scores in both altruism and reasoning ability. Then we use these groups in order to analyze the joint effect of the two characteristics on the individual choice of cooperating and on successful paired cooperation. Subjects belonging to each group play first 10 one-shot prisoner's dilemma (PD) games with ten random partners and then three consecutive 10-round repeated PD games with three random partners. In all games, we elicit players' beliefs regarding cooperation using an incentive compatible method. Individuals with high altruism are more optimistic about the cooperative behavior of the other player in the one-shot game. They also show higher individual cooperation and paired cooperation rates in the first repetitions of this game. Contrary to the one-shot PD games where high reasoning ability reduces the probability of playing cooperatively, the sign of the relationship is inverted in the first repeated PD game, showing that high reasoning ability individuals better adjust their behavior to the characteristics of the game they are playing. In this sense, the joint effect of reasoning ability and altruism is not linear, with reasoning ability counteracting the cooperative effect of altruism in the one-shot game and reinforcing it in the first repeated game. However, experience playing the repeated PD games takes over the two individual characteristics in explaining individual and paired cooperation. Thus, in a (PD) setting, altruism and reasoning ability significantly affect behavior in single encounters, while in repeated interactions individual and paired cooperation reach similarly high levels independently of these individual characteristics.
Highlights
Under the assumption of common knowledge of rationality and perfect information, the only Nash equilibrium of the finitely repeated Prisoner’s Dilemma (PD) is mutual defection at each stage of the game
Before reporting the detailed results related to cooperation behavior in the (PD) tasks, we first describe the outcomes of the reasoning ability test and of the Dictator Game, and subjects’ beliefs in the PD tasks
We study cooperative behavior in (PD) games using a neat 2 by 2 factorial design, considering high vs. low altruism and high vs. low reasoning ability
Summary
Under the assumption of common knowledge of rationality and perfect information, the only Nash equilibrium of the finitely repeated Prisoner’s Dilemma (PD) is mutual defection at each stage of the game. An alternative explanation is that some players may try to “build a reputation” of cooperation in order to achieve a higher total payoff in the game Both Andreoni and Miller (1993) and Cooper et al (1996) use evidence of cooperation in the one-shot PD game as an indicator that a positive proportion of individuals are altruistic. Both Andreoni and Miller (1993) and Cooper et al (1996) use evidence of cooperation in the one-shot PD game as an indicator that a positive proportion of individuals are altruistic1 They find that cooperation is higher when the PD is repeated for a finite number of times, consistent with reputation building. We elicit subjects’ beliefs in the PD games in order to better understand the relationship between altruism and cooperative behavior
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