Punishment in Iterated Chicken and Prisoner's Dilemma Games

Abstract

Iterated playing of noncooperative games can result in full cooperation. Repeated playing of the noncooperative game permits the sucker to punish the initial defector by defecting in subsequent plays. This article shows that many n- person prisoner's dilemma (PD) games have chicken games embedded within them. In addition, positive externalities produce embedded chicken games, as physical coercion does when used to punish defectors. This characteristic has substantial implications for various solutions to iterated PD games. The difficulty encountered in chicken games is that the sucker must punish oneself in order to punish the defector. It is shown that various versions of the folk theorem, such as those by Friedman, Fudenberg and Maskin, and Abreu, do not extend to the chicken games under a number of realistic assumptions. Hence iterated playing by rational, self-interested actors will not result in cooperative behavior. What is needed to induce cooperative solutions is the presence of vengeful personalities who induce the evolution of metanorms.