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Patience or Fairness? Analyzing Social Preferences in Repeated Games
Department of Economics, University of Pittsburgh, Pittsburgh, PA 15260, USA
School of Economic Sciences, Washington State University, Pullman, WA 99164, USA
* Author to whom correspondence should be addressed.
Received: 9 January 2012 / Accepted: 16 March 2012 / Published: 21 March 2012
Abstract: This paper investigates how the introduction of social preferences affects players’ equilibrium behavior in both the one-shot and the infinitely repeated version of the Prisoner’s Dilemma game. We show that fairness concerns operate as a ”substitute” for time discounting in the infinitely repeated game, as fairness helps sustain cooperation for lower discount factors. In addition, such cooperation can be supported under larger parameter values if players are informed about each others’ social preferences than if they are uninformed. Finally, our results help to identify conditions under which cooperative behavior observed in recent experimental repeated games can be rationalized using time preferences alone (patience) or a combination of time and social preferences (fairness).
Keywords: prisoner’s dilemma; repeated games; inequity aversion; time discounting, social preferences
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MDPI and ACS Style
Duffy, J.; Muñoz-García, F. Patience or Fairness? Analyzing Social Preferences in Repeated Games. Games 2012, 3, 56-77.
Duffy J, Muñoz-García F. Patience or Fairness? Analyzing Social Preferences in Repeated Games. Games. 2012; 3(1):56-77.
Duffy, John; Muñoz-García, Félix. 2012. "Patience or Fairness? Analyzing Social Preferences in Repeated Games." Games 3, no. 1: 56-77.