Punishment strategies in repeated games: Evidence from experimental markets |
| |
| Affiliation: | 1. Institute for Financial and Actuarial Mathematics and Institute for Risk and Uncertainty, University of Liverpool, Center for Doctoral Training, Chadwick Building, G62, Liverpool, UK;2. Department of Economics, University of Pretoria, Kiel Institute for the World Economy, Private Bag X20, Hatfield 0028, South Africa;1. Department of Economics, Universidad Carlos III de Madrid, Calle Madrid, 126, 28903 Getafe, Madrid, Spain;2. Department of Economics, University of California at Riverside, 900 University Avenue, Riverside, CA 92506, USA;1. Department of Economics, Shiv Nadar University, India;2. School of Management and Governance, Murdoch University, Australia |
| |
| Abstract: | An experiment is designed to provide a snapshot of the strategies used by players in a repeated price competition game with a random continuation rule. One hundred pairs of subjects played the game over the Internet, with subjects having a few days to make their decisions in each round. Occasionally subjects are asked to enter one-period-ahead pricing strategies instead of prices. According to the elicited strategies, between 90% and 95% of subjects punish less harshly (in their initial response to a deviation) than implied by the grim trigger strategy, and do so in a way that depends on the size of the other subjectʼs deviation. Future earnings are highest for subjects adopting the tit-for-tat strategy, even after controlling for a subjectʼs past earnings. Punishment strategies are generally softer and more graduated than implied by a grim trigger strategy, and do better as a result. |
| |
| Keywords: | Experiment Cooperation Tit-for-tat Grim trigger strategy |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
