Accuracy and retaliation in repeated games with imperfect private monitoring: Experiments

• Published in: Games and economic behavior Vol. 120; pp. 193 - 208
• Main Authors: Kayaba, Yutaka, Matsushima, Hitoshi, Toyama, Tomohisa
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.03.2020
• Subjects: Experiments; Generous tit-for-tat; Imperfect private monitoring; Repeated prisoner's dilemma; Retaliation intensity; Imperfect private monitoring; D03; Retaliation intensity; Repeated prisoner's dilemma; Generous tit-for-tat; C71; C70; Experiments; C73; C72
• ISSN: 0899-8256; 1090-2473; 1090-2473
• DOI: 10.1016/j.geb.2019.12.003

We experimentally examine repeated prisoner's dilemma with random termination, in which monitoring is imperfect and private. Our estimation indicates that a significant proportion of the subjects follows generous tit-for-tat strategies, which are stochastic extensions of tit-for-tat. However, the observed retaliating policies are inconsistent with the generous tit-for-tat equilibrium behavior. Showing inconsistent behavior, subjects with low accuracy do not tend to retaliate more than those with high accuracy. Furthermore, subjects with low accuracy tend to retaliate considerably with lesser strength than that predicted by the equilibrium theory, while subjects with high accuracy tend to retaliate with more strength than that predicted by the equilibrium theory, or with strength almost equivalent to it.