Cooperation in infinitely repeated games of strategic complements and substitutes

Ayse Gül Mermer, Wieland Müller, Sigrid Suetens

Publications: Contribution to journalArticlePeer Reviewed

Abstract

We report the results of an experiment conducted to study the effect of strategic substitutability and strategic complementarity on cooperation in infinitely repeated two-player games. We find that choices in the first rounds of the repeated games are significantly more cooperative under strategic substitutes than under strategic complements and that players are more likely to choose joint-payoff maximizing choices in the former than in the latter case. We argue that this effect is driven by the fact that it is less risky to cooperate under substitutes than under complements. We also find that choices do not remain more cooperative under strategic substitutes than under complements over the course of the rounds within the repeated games. We show that this is because best-reply dynamics come into the picture: players are more inclined to follow cooperative moves of the partner under complements, offsetting the treatment effect observed in the first rounds. (c) 2021 Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)1191-1205
Number of pages15
JournalJournal of Economic Behavior & Organization
Volume188
DOIs
Publication statusPublished - Aug 2021

Austrian Fields of Science 2012

  • 502045 Behavioural economics
  • 502021 Microeconomics

Keywords

  • cooperation
  • repeated games
  • experimental economics
  • Experimental economics
  • PRISONERS
  • COORDINATION GAMES
  • Repeated games
  • OLIGOPOLY
  • Cooperation
  • EQUILIBRIUM
  • Strategic complements
  • Strategic substitutes

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