Delayed Review in Repeated Relationships

46 Pages Posted: 2 Jun 2016 Last revised: 27 Dec 2017

Date Written: December 27, 2017

Abstract

Many theoretical results rely on delayed review of imperfect information for sustaining cooperative outcomes. This paper uses a laboratory experiment designed around a repeated prisoner's dilemma with imperfect monitoring to study what effect delay has on cooperation in practice. Information was received in every period of the game in one treatment and every other period of the game in another. While the parameters were chosen so that equilibrium welfare is higher with delay, the welfare levels in the two treatments were similar. Moreover, subjects were less likely to cooperate with than without delay in additional treatments where the game was played against a computer with an equilibrium trigger strategy. The results suggest that the cooperating-enhancing effect of exogenous delay of information may be smaller than predicted for two reasons: endogenous leniency in subjects' punishment strategies and an element of randomness in behavior.

Keywords: Repeated, Games, Delay, Experiment, Imperfect, Monitoring

JEL Classification: C73, C90, D8

Suggested Citation

Evdokimov, Piotr, Delayed Review in Repeated Relationships (December 27, 2017). Available at SSRN: https://ssrn.com/abstract=2788224 or http://dx.doi.org/10.2139/ssrn.2788224

Piotr Evdokimov (Contact Author)

Humboldt University Berlin ( email )

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