American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
The Effects of Time Preferences on Cooperation: Experimental Evidence from Infinitely Repeated Games
American Economic Journal: Microeconomics
vol. 15,
no. 1, February 2023
(pp. 618–37)
Abstract
This paper studies the effects of time preferences on cooperation in an infinitely repeated prisoner's dilemma game experiment. Subjects play repeated games in the lab, all decisions at once, but stage game payoffs are paid over an extended period of time. Changing the time window of stage game payoffs (weekly or monthly) varies discount factors, and a delay for the first-stage game payoffs eliminates/weakens present bias. First, subjects with weekly payments cooperate more than subjects with monthly payments—higher discount factors promote greater cooperation. Second, the rate of cooperation is higher when there is a delay—present bias reduces cooperation.Citation
Kim, Jeongbin. 2023. "The Effects of Time Preferences on Cooperation: Experimental Evidence from Infinitely Repeated Games." American Economic Journal: Microeconomics, 15 (1): 618–37. DOI: 10.1257/mic.20200195Additional Materials
JEL Classification
- C72 Noncooperative Games
- C73 Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
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