Article ID Journal Published Year Pages File Type
957324 Journal of Economic Theory 2009 31 Pages PDF
Abstract

This paper uses laboratory experiments to test the implications of the theory of repeated games on equilibrium payoffs and estimate strategies in an infinitely repeated prisoners' dilemma game with imperfect public monitoring. We find that subjects' payoffs (i) decrease as noise increases, and (ii) are lower than the theoretical maximum for low noise, but exceed it for high noise. Under the assumption that the subjects' strategy uses thresholds on the public signal for transition between cooperation and punishment states, we find that the best fitting strategy simply compares the most recent public signal against a single threshold.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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