Valuing rewards to others in a prisoner's dilemma game

Abstract

People value rewards to others but discount those rewards based on social distance; rewards to a socially closer person are valued more than identical rewards to a socially more distant person (Jones and Rachlin, 2006). The concept of social discounting can explain cooperation and defection in two-player prisoner's dilemma (PD) games (Axelrod, 1980). The contingencies of a PD game are such that in any single game cooperation is costly to each player herself but beneficial to the other player. From the viewpoint of each player, the costs of cooperation are fully realized, but the benefits of cooperation are discounted by the social distance to the other player. The present experiment measured cooperation and defection in two PD-game conditions with differing reward magnitudes. In one (the 1-2-3-4 condition), the cost of cooperation exceeded its socially discounted benefit, and players were predicted to defect; in the other (the 1-2-9-10 condition), the discounted benefit of cooperation exceeded its cost, and players were predicted to cooperate. Over the course of repeated trials defection increased with the 1-2-3-4 condition but not with the 1-2-9-10 condition. Moreover, participants who rated their partners as closer, relative to random classmates, cooperated at higher rates – consistent with social discounting.