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Equilibrium selection in infinitely repeated games with communication

Author

Listed:
  • Maximilian Andres

    (University of Potsdam, Berlin School of Economics)

Abstract
The present paper proposes a novel approach for equilibrium selection in the infinitely repeated prisoner’s dilemma where players can communicate before choosing their strategies. This approach yields a critical discount factor that makes different predictions for cooperation than the usually considered sub-game perfect or risk dominance critical discount factors. In laboratory experiments, we find that our factor is useful for predicting cooperation. For payoff changes where the usually considered factors and our factor make different predictions, the observed cooperation is consistent with the predictions based on our factor.

Suggested Citation

  • Maximilian Andres, 2024. "Equilibrium selection in infinitely repeated games with communication," CEPA Discussion Papers 75, Center for Economic Policy Analysis.
    • Handle: RePEc:pot:cepadp:75
    DOI: 10.25932/publishup-63180
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    References listed on IDEAS

    as
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    Cited by:

    1. Lisa Bruttel & Maximilian Andres, 2024. "Communicating Cartel Intentions," CEPA Discussion Papers 77, Center for Economic Policy Analysis.

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    More about this item

    Keywords

    cooperation; communication; infinitely repeated game; machine learning;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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