Cooperation in an Overlapping Generations Experiment

Recent theoretical work shows that folk theorems can be developed for infinite overlapping generations games. Cooperation in such games can be sustained as a Nash equilibrium. But, of course, there are other equilibria. This paper investigates experimentally whether cooperation actually occurs in a...

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Published inGames and economic behavior Vol. 36; no. 2; pp. 264 - 275
Main Authors Offerman, Theo, Potters, Jan, Verbon, Harrie A.A.
Format Journal Article
LanguageEnglish
Published Elsevier Inc 01.08.2001
Elsevier
SeriesGames and Economic Behavior
Subjects
Cooperation
Equilibrium
Experiments
Game theory
Microeconomics
overlapping generations
Overlapping-generations model
trigger strategies
overlapping generations
trigger strategies
experiments
cooperation
Online AccessGet full text
ISSN0899-8256
1090-2473
DOI10.1006/game.2000.0816

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Summary:Recent theoretical work shows that folk theorems can be developed for infinite overlapping generations games. Cooperation in such games can be sustained as a Nash equilibrium. But, of course, there are other equilibria. This paper investigates experimentally whether cooperation actually occurs in a simple overlapping generations game. Subjects both play the game and formulate strategies. Our main finding is that subjects fail to exploit the intertemporal structure of the game. Even when we provided subjects with a recommendation to play the grim trigger strategy, most of the subjects still employed safe history-independent strategies. Journal of Economic Literature Classification Numbers: C72, C92, D90.
Bibliography:ObjectType-Article-2
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ISSN:0899-8256
1090-2473
DOI:10.1006/game.2000.0816