Rational cooperation in the finitely repeated prisoners' dilemma |
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Authors: | David M Kreps Paul Milgrom John Roberts Robert Wilson |
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Affiliation: | Graduate School of Business, Stanford University, Stanford, California 94305 USA;Graduate School of Management, Northwestern University, Evanston, Illinois 60201 USA;Graduate School of Business, Stanford University, Stanford, California 94305 USA |
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Abstract: | A common observation in experiments involving finite repetition of the prisoners' dilemma is that players do not always play the single-period dominant strategies (“finking”), but instead achieve some measure of cooperation. Yet finking at each stage is the only Nash equilibrium in the finitely repeated game. We show here how incomplete information about one or both players' options, motivation or behavior can explain the observed cooperation. Specifically, we provide a bound on the number of rounds at which Fink may be played, when one player may possibly be committed to a “Tit-for-Tat” strategy. |
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