In this paper, we analyse if individual inequality aversion measured with simple experimental games depends on whether the monetary endowment in these games is either a windfall gain (“house money”) or a reward for a certain effort-related performance. We then examine whether the way of preference elicitation affects the explanatory power of inequality aversion in social dilemma situations. Our results indicate that individual inequality aversion measured by the model of Fehr and Schmidt (Quarterly Journal of Economics 114(3):817–868, 1999) is not generally robust to the way endowments emerge. The inequality aversion model has only low predictive power for individual behaviour. It performs best when the endowment is house money and relatively small.

This paper compares behavior under four different implementations of infinitely repeated games in the laboratory: the standard random termination method [proposed by Roth and Murnighan (J Math Psychol 17:189–198, 1978)] and three other methods that de-couple the expected number of rounds and the discount factor. Two of these methods involve a fixed number of repetitions with payoff discounting, followed by random termination [proposed by Sabater-Grande and Georgantzis (J Econ Behav Organ 48:37–50, 2002)] or followed by a coordination game [proposed in (Andersson and Wengström in J Econ Behav Organ 81:207–219, 2012; Cooper and Kuhn in Am Econ J Microecon 6:247–278, 2014a)]. We also propose a new method—block random termination—in which subjects receive feedback about termination in blocks of rounds. We find that behavior is consistent with the presence of dynamic incentives only with methods using random termination, with the standard method generating the highest level of cooperation. Subject behavior in the other two methods display two features: a higher level of stability in cooperation rates and less dependence on past experience. Estimates of the strategies used by subjects reveal that across implementations, even when the discount rate is the same, if interactions are expected to be longer defection increases and the use of the Grim strategy decreases.

We measure the other-regarding behavior in samples from three related populations in the upper Midwest of the United States: college students, non-student adults from the community surrounding the college, and adult trainee truckers in a residential training program. The use of typical experimental economics recruitment procedures made the first two groups substantially self-selected. Because the context reduced the opportunity cost of participating dramatically, 91 % of the adult trainees solicited participated, leaving little scope for self-selection in this sample. We find no differences in the elicited other-regarding preferences between the self-selected adults and the adult trainees, suggesting that selection is unlikely to bias inferences about the prevalence of other-regarding preferences among non-student adult subjects. Our data also reject the more specific hypothesis that approval-seeking subjects are the ones most likely to select into experiments. Finally, we observe a large difference between self-selected college students and self-selected adults: the students appear considerably less pro-social.

This experiment investigates a stochastic version of the infinitely repeated prisoner’s dilemma. The stochastic element introduces the importance of beliefs about the future for supporting cooperation as well as cooperation and defection on the equilibrium path. There is more cooperation in treatments where beliefs predict cooperation after subjects gain sufficient experience. There is some evidence for cooperation and defection as predicted by equilibrium, but there is stronger evidence for behavior conditioning on past actions that is not consistent with equilibrium play. In particular, subjects continue cooperating even when it is no longer possible in equilibrium for the realized game.

The strategy frequency estimation method (Dal Bó and Fréchette in Am Econ Rev 101(1):411-429, 2011; Fudenberg in Am Econ Rev 102(2):720-749, 2012) allows us to estimate the fraction of subjects playing each of a list of strategies in an infinitely repeated game. Currently, this method assumes that subjects tremble with the same probability. This paper extends this method, so that subjects’ trembles can be heterogeneous. Out of 60 ex ante plausible specifications, the selected model uses the six strategies described in Dal Bó and Fréchette (2018), and allows the distribution of trembles to vary by strategy.

We systematically investigate prisoner’s dilemma and dictator games with valence framing. We find that give versus take frames influence subjects’ behavior and beliefs in the prisoner’s dilemma games but not in the dictator games. We conclude that valence framing has a stronger impact on behavior in strategic interactions, i.e., in the prisoner’s dilemma game, than in allocation tasks without strategic interaction, i.e., in the dictator game.

Cooperative behavior constitutes a key aspect of human society and non-human animal systems, but explaining how cooperation evolves represents a major scientific challenge. It is now well established that social network structure plays a central role for the viability of cooperation. However, not much is known about the importance of the positions of cooperators in the networks for the evolution of cooperation. Here, we investigate how the spread of cooperation is affected by correlations between cooperativeness and individual social connectedness (such that cooperators occupy well-connected network positions). Using simulation models, we find that these correlations enhance cooperation in standard scale-free networks but not in standard Poisson networks. In contrast, when degree assortativity is increased such that individuals cluster with others of similar social connectedness, we find that Poisson networks can maintain high levels of cooperation, which can even exceed those of scale-free networks. We show that this is due to dynamics where bridge areas between social clusters act as barriers to the spread of defection. We also find that this positive effect on cooperation is sensitive to the presence of Trojan horses (defectors placed within cooperator clusters), which allow defection to invade. The results provide new knowledge about the conditions under which cooperation may evolve, and are also relevant to consider in regard to the design of cooperation studies.

Reputation plays a major role in human societies, and it has been proposed as an explanation for the evolution of cooperation. While the majority of previous studies equates reputation with a transparent and complete history of players’ past decisions, reputations in real life are often ambiguous and opaque. Using web-based experiments, we explore the extent to which opaque reputation works in isolating defectors, with and without partner selection opportunities. We found that low reputation works as a signal of untrustworthiness, whereas medium or high reputations are not taken into account by subjects for orienting their choices. Reputation without partner selection does not promote cooperative behavior; that is, defectors do not turn into cooperators only for the sake of getting a positive reputation. Finally, in a third study, when reputation is pivotal to selection, then a substantial proportion of would-be-defectors turn into cooperators. Taken together, these results provide insights about the characteristics of reputation and about the way in which humans make use of it when selecting partners, and also when knowing that they will be selected.

The problems of how self-interested players can cooperate despite incentives to defect, and how players can coordinate despite the presence of multiple equilibria, are among the oldest and most fundamental in game theory. In this report, we demonstrate that a plausible and even natural specification of the reference outcome in a game simultaneously predicts systematic cooperation and defection in the Prisoner’s Dilemma, as well as equilibrium selection and out-of-equilibrium play in coordination games. The predictions hold even if players are purely self-interested, there are no salient labels, the game is played only once, and there is no communication of any kind. Furthermore, the predictions are unique, as opposed to the multiplicity of equilibria in the infinitely repeated Prisoner’s Dilemma and in coordination games. We apply experimental results to test the predictions of the model.

We report an experiment exploring sequential context effects on strategy choices in one-shot Prisoner’s Dilemma (PD) game. Rapoport and Chammah (1965) have shown that some PDs are cooperative and lead to high cooperation rate, whereas others are uncooperative. Participants played very cooperative and very uncooperative games, against anonymous partners. The order in which these games were played affected their cooperation rate by producing perceptual contrast, which appeared only between the trials, but not between two separate sequences of games. These findings suggest that people may not have stable perceptions of absolute cooperativeness. Instead, they judge the cooperativeness of each fresh game only in relation to the previous game. The observed effects suggest that the principles underlying judgments about highly abstract magnitudes such as cooperativeness may be similar to principles governing the perception of sensory magnitudes.

This paper compares the behavior of individuals playing a classic two-person deterministic prisoner’s dilemma (PD) game with choice data obtained from repeated interdependent security prisoner’s dilemma games with varying probabilities of loss and the ability to learn (or not learn) about the actions of one’s counterpart, an area of recent interest in experimental economics. This novel data set, from a series of controlled laboratory experiments, is analyzed using Bayesian hierarchical methods, the first application of such methods in this research domain.

We find that individuals are much more likely to be cooperative when payoffs are deterministic than when the outcomes are probabilistic. A key factor explaining this difference is that subjects in a stochastic PD game respond not just to what their counterparts did but also to whether or not they suffered a loss. These findings are interpreted in the context of behavioral theories of commitment, altruism and reciprocity. The work provides a linkage between Bayesian statistics, experimental economics, and consumer psychology.

Vlaev and Chater (2006) demonstrated that the cooperativeness of previously seen prisoner’s dilemma games biases choices and predictions in the current game. These effects were: a) assimilation to the mean cooperativeness of the played games caused by action reinforcement, and b) perceptual contrast with the preceding games depending on the range and the rank order of their cooperativeness. We demonstrate that, when playing against choice strategies that are not biased by such factors, perceptual biases disappear and only assimilation bias caused by reinforcement persists. This suggests that reinforcement learning is a powerful source of inconsistency in strategic interaction, which may not be eliminated even if the other players are unbiased and the markets are efficient.

Laboratory studies of choice and decision making among real monetary rewards typically use smaller real rewards than those common in real life. When laboratory rewards are large, they are almost always hypothetical. In applying laboratory results meaningfully to real-life situations, it is important to know the extent to which choices among hypothetical rewards correspond to choices among real rewards and whether variation of the magnitude of hypothetical rewards affects behavior in meaningful ways. The present study compared real and hypothetical monetary rewards in two experiments. In Experiment 1, participants played a temporal discounting game that incorporates the logic of a repeated prisoner’s-dilemma (PD) game versus tit-for-tat; choice of one alternative (“defection” in PD terminology) resulted in a small-immediate reward; choice of the other alternative (“cooperation” in PD terminology) resulted in a larger reward delayed until the following trial. The larger-delayed reward was greater for half of the groups than for the other half. Rewards also differed in type across groups: multiples of real nickels, hypothetical nickels, or hypothetical hundred-dollar bills. All groups significantly increased choice of the larger delayed reward over the 40 trials of the experiment. Over the last 10 trials, cooperation was significantly higher when the difference between larger and smaller hypothetical rewards was greater. Reward type (real or hypothetical) made no significant difference in cooperation on most measures. In Experiment 2, real and hypothetical rewards were compared in social discounting—the decrease in value to the giver of a reward as social distance increases to the receiver of the reward. Social discount rates were well described by a hyperbolic function. Discounting rates for real and hypothetical rewards did not significantly differ. These results add to the evidence that results of experiments with hypothetical rewards validly apply in everyday life.

Corruption is an age-old issue. Although various mitigation measures have been developed over time, it persistently exists and transforms with the dynamic business environment. The development of corruption is linked to the skills of criminals to cover their tracks. Control mechanisms and other lines of defense are insignificant when persons of power override, bully or collaborate to carry out corruption. Since humans are perceived to be rational, educating individuals on the evils of corruption with its apparent negative connotations would have been a logical approach to disrupting corruption. However, the growing trend of corruption reflects otherwise. Human behavior is subjective and based on a person–situation complexity, relationships and associations around human life. This pilot study assesses the decisions of individuals based on various corruption scenarios, using 20 questions modeled around Corruption Dimensions and Prisoner’s Dilemma. Of the respondents, 92% had formal exposure to anti-corruption-related studies. Most respondents responded negatively to corruption-related scenarios in the Corruption Dimensions, with noted bias in their criticism when it involved a politician as compared with a businessman. Similarly, the Prisoner’s Dilemma questions also reflected selective reasoning when comparing those with personal relationships as compared with acquaintances. The strength of the evidence, the independence of the judiciary, the ability to escape, the reluctance to self-incriminate and the personal benefits affect the judgment of the respondents. However, in situations involving environmental issues, respondents selected to confess regardless of the situation stating that it was the right thing to do. Education creates awareness on individual rights, options and, to a certain extent, the moral and legal obligations. However, the subjectivity of the person’s associations and lifelong experience also plays a major role in the decision-making process.