Prisoner's dilemma and other regarding preferences

Open Access
Author:
Lin, Xinquan
Area of Honors:
Economics
Degree:
Bachelor of Arts
Document Type:
Thesis
Thesis Supervisors:
  • Kalyan Chatterjee, Thesis Supervisor
  • Russell Paul Chuderewicz, Honors Advisor
  • James R. Tybout, Faculty Reader
Keywords:
  • economics
  • behavioral economics
  • experimental economics
  • rationality
  • game theory
  • other-regarding preferences
  • Prisoner's dilemma
  • altruism
  • Dictator game
Abstract:
The cooperative behavior in Prisoner’s dilemma always intrigues economists since game theoretic analysis predicts the behavior of non-cooperation in this game. Being cooperative in Prisoner’s dilemma will incur a cost to themselves while giving a benefit to their opponent. Instead of saying that people are irrational, this paper assumes that people have other-regarding preferences so that people will become cooperative in Prisoner’s dilemma. In order to observe this preference, this paper provides a new experimental methodology by controlling the opponent’s payoff, and we call it “revised Prisoner’s dilemma.” Also, the setup of the revised Prisoner’s dilemma can help us to further rule out some decision makings that are obviously “irrational,” which cannot be identified in previous researches. As a result, by comparing the revised Prisoner’s dilemma and standard Prisoner’s dilemma, we have observed that the behavior of the participants changes if their opponent’s payoff is changed. Specifically, we have observed that people are more willing to be cooperative in standard Prisoner’s dilemma than in revised Prisoner’s dilemma, confirming the existence of other-regarding preferences.