CeDEx 2020-15: Risk, Temptation, and Efficiency in Prisoner's Dilemmas

Summary

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 suggestion that curbing the level of temptation is the most important
way to improve cooperation in social dilemmas.

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Authors

Simon Gaechter, Kyeongtae Lee and Martin Sefton

 

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