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The role of payoff parameters for cooperation in the one-shot Prisoner's Dilemma

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  • Gächter, Simon
  • Lee, Kyeongtae
  • Sefton, Martin
  • Weber, Till O.

Abstract

The Prisoner's Dilemma is arguably the most important model of social dilemmas, but our knowledge about how its material payoff structure affects cooperation is incomplete. We investigate the effect of variation in material payoffs on cooperation in one-shot Prisoner's Dilemma games. We report results from three experiments (N = 1,993): in a preliminary experiment, we vary the payoffs over a large range. In our first main experiment (Study 1), we present a novel design that varies payoffs orthogonally in a within-subjects design. Our second main experiment, Study 2, investigates the orthogonal variation of payoffs in a between-subjects design. In a complementary analysis we also study the closely related payoff indices of normalized loss and gain, and the K-index. A robust finding of our experiments is that cooperation increases with the gains of mutual cooperation over mutual defection.

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  • Gächter, Simon & Lee, Kyeongtae & Sefton, Martin & Weber, Till O., 2024. "The role of payoff parameters for cooperation in the one-shot Prisoner's Dilemma," European Economic Review, Elsevier, vol. 166(C).
    • Handle: RePEc:eee:eecrev:v:166:y:2024:i:c:s0014292124000825
    DOI: 10.1016/j.euroecorev.2024.104753
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    More about this item

    Keywords

    Prisoner's Dilemma; Cooperation; Payoff parameters; Temptation; Risk; Efficiency; Normalized gain; Normalized loss; K-index; Experiments;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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