Seminars

Abstract: We study behavior in indefinitely repeated prisoner’s dilemma (PD) games where subjects play against robot opponents that are known to play the grim trigger strategy. We vary the probability with which the repeated game continues from one round to the next, thereby varying whether cooperation can be rationalized or not. Our aim is to use this framework to empirically evaluate a theory of rational inattention. The model posits that individuals approach the repeated PD game with some default belief about the return to cooperative play. By exerting cognitive effort, they can possibly improve upon this default belief, by taking into account the continuation probability, but any improvement will depend on the player’s cost of employing cognitive effort. If these costs are high, then the probability of cooperation will depend largely on the players’ default beliefs about how to approach the repeated game, but if cognitive costs are low then players will react to changes in the different continuation probabilities that they face. Considering various measures for cognitive abilities, and eliciting prior beliefs about cooperative play, we find experimental evidence in support of the prediction s of this model.

* 본 세미나는 VEAEBES(Virtual East Asia Experimental and Behavioral Economics Seminar series) 주최로 열리는 세미나입니다.

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