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Time Horizon and Cooperation in Continuous Time

Author

Listed:
  • Maria Bigoni

    (Department of Economics, University of Bologna)

  • Marco Casari

    (Department of Economics, University of Bologna)

  • Andrzej Skrzypacz

    (Graduate School of Business, Stanford University)

  • Giancarlo Spagnolo

    (SITE, Tor Vergata, EIEF and CEPR)

Abstract

We study interactions with different durations and termination rules in a (quasi) continuous-time prisoner’s dilemma experiment. We find that cooperation is easier to achieve and sustain with deterministic horizons than with stochastic ones; end-game effects emerge, but subjects postpone them with experience; longer duration helps cooperation. Static theories for continuous-time games cannot simultaneously account for these findings and miss the evolution of behavior across supergames. We propose a simple model – based on the replicator dynamics – that proves consistent with this evidence. The analysis of strategies and an additional treatment lend further support to the proposed explanation.

Suggested Citation

  • Maria Bigoni & Marco Casari & Andrzej Skrzypacz & Giancarlo Spagnolo, 2011. "Time Horizon and Cooperation in Continuous Time," EIEF Working Papers Series 1116, Einaudi Institute for Economics and Finance (EIEF), revised Jan 2013.
    • Handle: RePEc:eie:wpaper:1116
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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