We propose an axiomatic approach for equilibrium selection in the discounted, infinitely repeated symmetric Prisoner's Dilemma. Our axioms characterize a unique selection criterion that is also useful as a tool for applied comparative statics exercises as it results in a critical discount factor...

We test infinitely repeated prisoner's dilemma games with random continuation in the laboratory to capture the effect of strategic risk on co-operation. We propose a criterion building on Harsanyi and Selten's (1988) risk dominance concept and motivate it by three heuristic principles. Our...

We find that contrary to common perception, cooperation as equilibrium of the infinitely repeated discounted prisoner's dilemma is in many relevant cases not very plausible, or at least questionable: for a significant subset of the payoff-discount factor parameter space cooperation equilibria...

We find that contrary to common perception, cooperation as equilibrium of the infinitely repeated discounted prisoner's dilemma is in many relevant cases not very plausible, or at least questionable: for a significant subset of the payoff-discount factor parameter space cooperation equilibria...

We propose a general framework for analyzing and comparing ownership structures with respect to creating incentives for co-operative behavior (e.g. efficient investment) in long-run relationships. We generalize models by Garvey (1995), Halonen (2002), and Baker, Gibbons and Murphy (2002) and...

We find that - contrary to common perception - co-operation as equilibrium of the infinitely repeated discounted Prisoner's Dilemma is in many relevant cases not very plausible: For a significant subset of the payoff-discount factor parameter space, all co-operation equilibria are strictly risk...

Collusive agreements and relational contracts are commonly modeled as equilibria of dynamic games with the strategic features of the repeated Prisoner's Dilemma. The pay-offs agents obtain when being ‘cheated upon’ by other agents play no role in these models. We propose a way to take these...