CIRJE-F-1115 "Behavioral Theory of Repeated Prisoner’s Dilemma: Generous Tit-For-Tat Strategy"
Author Name

Matsushima, Hitoshi

Date February 2019
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Remarks

 

Abstract

This study investigates infinitely repeated games of a prisoner’s dilemma with additive separability in which the monitoring technology is imperfect and private. Behavioral incentives indicate that, in this setting, a player is not only motivated by pure self-interest but also by reciprocity. Players often become naïve and select an action unconsciously. By focusing on generous tit-for-tat strategies, we characterize a Nash equilibrium with behavioral incentives, termed behavioral equilibrium, in an accuracy-contingent manner. By eliminating the gap between theory and evidence, this study argues that reciprocity plays a substantial role in motivating a player to consciously make decisions.