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Risky punishment and reward in the prisoner's dilemma

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  • Dürsch, Peter
  • Servátka, Maros

Abstract

We conduct a prisoner’s dilemma experiment with a punishment/reward stage, where punishments and rewards are risky. This is compared with a risk free treatment. We find that subjects do not change their behavior in the face of risky outcomes. Additionally, we measure risk attitude and the emotions of subjects. While we find a strong influence of emotions, individual risk aversion has no effect on the decision to punish or reward. This is good news for lab experiments who abstract from risky outcomes. From the perspective of social preferences, our results provide evidence for risk neutral inclusion of other player’s payoffs in the decisionmaker’s utility function.

Suggested Citation

  • Dürsch, Peter & Servátka, Maros, 2007. "Risky punishment and reward in the prisoner's dilemma," Papers 07-62, Sonderforschungsbreich 504.
    • Handle: RePEc:mnh:spaper:2506
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    File URL: https://madoc.bib.uni-mannheim.de/2506/1/dp07_62.pdf
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