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American Economic Review: Vol. 102 No. 2 (April 2012)

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Slow to Anger and Fast to Forgive: Cooperation in an Uncertain World

Article Citation

Fudenberg, Drew, David G. Rand, and Anna Dreber. 2012. "Slow to Anger and Fast to Forgive: Cooperation in an Uncertain World." American Economic Review, 102(2): 720-49.

DOI: 10.1257/aer.102.2.720

Abstract

We study the experimental play of the repeated prisoner's dilemma when intended actions are implemented with noise. In treatments where cooperation is an equilibrium, subjects cooperate substantially more than in treatments without cooperative equilibria. In all settings there was considerable strategic diversity, indicating that subjects had not fully learned the distribution of play. Furthermore, cooperative strategies yielded higher payoffs than uncooperative strategies in the treatments with cooperative equilibria. In these treatments successful strategies were "lenient" in not retaliating for the first defection, and many were "forgiving" in trying to return to cooperation after inflicting a punishment. (JEL C72, C73, D81)

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Authors

Fudenberg, Drew (Harvard U)
Rand, David G. (Harvard U)
Dreber, Anna (Stockholm School of Economics)

JEL Classifications

C72: Noncooperative Games
C73: Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
D81: Criteria for Decision-Making under Risk and Uncertainty


American Economic Review



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