Revealed preferences in a sequential prisoners’ dilemma: A horse-race between six utility functions

Abstract

We experimentally investigate behavior and beliefs in a sequential prisoner's dilemma. Each subject had to choose an action as first mover and a conditional action as second mover. All subjects also had to state their beliefs about others' second-mover choices. Using these elicited beliefs, we apply the transparent Selten-Krischker approach to compare the explanatory power of a few current models of social and moral preferences. We find clear differences in explanatory power between the preference models, both without and with control for the number of free parameters. The best-performing models explain about 80% of the observed behavior. We compare our results with those obtained from a conventional maximum-likelihood approach, and find that the results by and large agree. We also present a structural model of belief formation. We find a consensus bias-whereby subjects believe others behave like themselves-and payoff-salience driven optimism-whereby subjects overestimate the probabilities for favorable outcomes.

The role of leaders in inducing and maintaining cooperation: The CC strategy

“…In the case of the Prisoners' Dilemma and other social dilemma games with a similar incentive structure (e.g., public goods games and common pool resource games), the main empirical results are as follows. To illustrate, suppose the game in Table 1 is played sequentially (like in Miettinen et al, 2018). One player decides first whether to cooperate or defect and then the other player can make his decision contingent on the first player's choice.…”

“…In Miettinen et al (2018), payoffs are given by 10 if both players defect, 30 if both players cooperate, and 50 and 5 if one player defects and the other player cooperates, respectively.…”

Centrality and cooperation in networks

“…This type of behavior is consistent with 'homo moralis' preferences described by Alger and Weibull (2013). See Miettinen et al (2017) for evidence that behavior in a sequential prisoners' dilemma is largely consistent with such preferences.…”

Conditional cooperation: Type stability across games

“…2 This method is typically based on a set of 22 questions. 3 On the other hand, a simple sequential prisoner's dilemma (SPD hereafter), for which only three questions are sufficient, can be used for type classification as well (Miettinen, Kosfeld, Fehr, and Weibull, 2017;Kosfeld, 2019;Eichenseer and Moser, 2019). For a researcher, the question arises whether using the simpler method is sufficient for type classification as it may save time and reduce cognitive load for the participants.…”