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Risk, Temptation, and Efficiency in Prisoner's Dilemmas

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  • Simon Gaechter

    (University of Nottingham)

  • Kyeongtae Lee

    (University of Nottingham)

  • Martin Sefton

    (University of Nottingham)

Abstract

We examine the effect of payoff variations on cooperation in one-shot prisoner's dilemma games. We focus on three factors: risk, temptation, and efficiency, which we vary as orthogonal treatments. We find that temptation has the largest impact on cooperation. Temptation directly deters cooperation and indirectly harms cooperation by lowering beliefs about the opponent's cooperativeness. Efficiency indirectly affects cooperation through beliefs, but the magnitude of the effect is relatively small compared to temptation. Risk does not have a significant effect on cooperation. Our finding suggests that curbing the level of temptation is the most important way to improve cooperation in social dilemmas.

Suggested Citation

  • Simon Gaechter & Kyeongtae Lee & Martin Sefton, 2020. "Risk, Temptation, and Efficiency in Prisoner's Dilemmas," Discussion Papers 2020-15, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    • Handle: RePEc:not:notcdx:2020-15
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    References listed on IDEAS

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    Keywords

    prisoner's dilemma; cooperation; temptation; efficiency; risk;
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