Colorful economics: Seeing red in a prisoner's dilemma game

The color red has been found to influence behavior and performance in a wide range of settings. We introduce the color red in a Prisoner’s Dilemma by performing a series of oneshot and repeated Bertrand duopoly laboratory games. We hypothesize a positive relationship between the color red and the number of competitive choices. Furthermore, we expect to see a habituation effect, implying that the impact of red on competitive behavior is more pronounced at the beginning of the experiment, to then fade away over time. Results indicate that the effect of the color red on cooperative behavior is more complex than hypothesized. We find no main effect for the color red, but we do reveal a significant habituation effect of the color red in the one-shot games. Contrary to our expectation, however, an escalation effect emerges in the repeated game, which suggests that the competition-enhancing effect of red is reinforced by receiving feedback about the other party’s choice.