Discussion Papers 2019
CIRJE-F-1115 | "Behavioral Theory of Repeated Prisoner’s Dilemma: Generous Tit-For-Tat Strategy" |
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Author Name | Matsushima, Hitoshi |
Date | February 2019 |
Full Paper | |
Remarks | Subsequently published in B. E. Journal of Theoretical Economics 20 (1), 2019. |
Abstract |
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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. |