My own criticism of the predictions from the theory of infinitely repeated games would be more directed towards their lack of applicability in my (AFAIK) finite life.
However, if I could gain immortality only by agreeing to spend it sitting in a laboratory playing prisoner's dilemma for ever - then I think I would pass. My guess is they have a sample selection problem.
And yes, I know I'm being dumb.
And no, I'm not being serious.
Authors: Bó, Pedro Dal; Fréchette, Guillaume R.
Source: The American Economic Review,
Volume 101, Number 1, February 2011, pp. 411-429(19)
Abstract: A usual criticism of the theory of infinitely repeated games is that it does not provide sharp predictions since there may be a multiplicity of equilibria. To address this issue, we present experimental evidence on the evolution of cooperation in infinitely repeated prisoner's dilemma games as subjects gain experience. We show that cooperation may prevail in infinitely repeated games, but the conditions under which this occurs are more stringent than the subgame perfect conditions usually considered or even a condition based on risk dominance.
I tend to agree even when you are dumb, of course. However, just to make life difficult for you:
ReplyDelete1. Discounting means that the relevant horizon is not infinite.
2. The first point may miss the point you are making (!) but then: what if we introduce uncertainty. There is a paper på Kreps et al from 1982 showing that a small amount of uncertainty can generate much cooperation in PD (However it has also been shown that it breaks down way before the "last few rounds" even in the Kreps et al paper).
I have no problems with that. I'm not unreasonable ;-)
ReplyDeleteBut they should change their title, in these cases:
1. The evolution of cooperation in games that are gonna keep on going for so long we don't even care what happens at the end when we start: Experimental evidence from trapped participants
2. The evolution of cooperation in games that could end at any time and might go on (but probably won't) for really long: Experimental evidence from participants who don't know if they'll be home for dinner tonight... or this week...