Title: The robustness of the "Raise-The-Stakes" strategy - Coping with exploitation in noisy Prisoner's Dilemma Games
Authors: Van den Bergh, Bram
Dewitte, Siegfried
Issue Date: 2005
Publisher: K.U.Leuven - Departement toegepaste economische wetenschappen
Series Title: DTEW Research Report 0515 pages:1-17
Abstract: Recent models of altruism point out the success of a strategy called 'Raise-The- Stakes' (RTS) in situations allowing variability in cooperation. In theory, RTS is difficult to exploit because it begins with a small investment in an iterated Prisoner's Dilemma Game. When its cooperation is reciprocated, RTS increases its generosity, thereby taking advantage of cooperative opportunities. Previous research has shown that human subjects indeed adopt RTS but start out moderately cooperative rather than with a minimal investment. This raises the question how robust RTS is against exploitation, certainly in a noisy situation. In a behavioral experiment we investigate whether human subjects vary their cooperation in interaction with reciprocators and cheaters in an iterated non-discrete version of a Prisoner's Dilemma Game. When confronted with a strategy that matches the investment of the subject on the previous round, we find that subjects are likely to increase cooperation. However, cooperation gradually breaks down in interaction with a strategy that undercuts the level of cooperation of the subjects, indicating the robustness of RTS. In line with RTS modeling studies, but in contrast with the cheater detection literature, we find that human subjects are less willing to increase cooperation when the perceived likelihood of mistakes increases.
Publication status: published
KU Leuven publication type: IR
Appears in Collections:Faculty of Economics and Business (FEB) - miscellaneous
Research Centre for Marketing and Consumer Science, Leuven

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