This paper shows that reciprocity comes from the desire to cooperate in finitely repeated prisoner's dilemma game. Before playing the finitely repeated prisoner's dilemma game, players choose the reciprocity level and commit to it, and the reciprocity level is public information. There are T...

Conditional cooperation is an important factor in voluntary cooperation. Fehr and Schmidt (1999) show that in public good games conditional cooperation among rational players is feasible if cooperators are sufficiently inequality averse and if there are not too many free riders. The derived...

Substantial evidence has accumulated in recent empirical works on the limited ability of the Nash equilibrium to rationalize observed behavior in many classes of games played by experimental subjects. This realization has led to several attempts aimed at finding tractable equilibrium concepts...