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The breakdown of cooperation in iterative real-time trust dilemmas

Published online by Cambridge University Press:  14 March 2025

Ryan O. Murphy ,
Amnon Rapoport  and
James E. Parco
Ryan O. Murphy*
Affiliation:
Columbia University, Center for the Decision Sciences, 420 West 118th Street, Room 805A Mail Code 3355, New York, NY 10027
Amnon Rapoport*
Affiliation:
University of Arizona, Dept. of Management and Policy, 405 McClelland Hall, Tucson, AZ 85721 and Hong Kong University of Science and Technology, Dept. of Economics, Kowloon, Hong Kong
James E. Parco*
Affiliation:
United States Air Force Academy, Dept. of Management, Colorado Springs, CO 80840
*
e-mail: [email protected]
e-mail: [email protected]
e-mail: [email protected]
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Abstract

We study a class of trust-based cooperation dilemmas that evolve in continuous time. Characteristic of these dilemmas is that as long as all n players continue to cooperate, their payoffs increase monotonically over time. Simultaneously, the temptation to defect increases too, as the first player to defect terminates the interaction and receives the present value of the payoff function whereas each of the other n — 1 players only receives a proportion δ (0 < δ < 1) of the defecting player's payoff. We introduce a novel experimental institution that we call the Real-Time Trust Game (RTTG) to examine this class of interactions. We then report the results from an iterated RTTG in which the values of n and δ are varied in a between-subjects design. In all conditions, cooperation breaks down in the population over iterations of the game. The rate of breakdown sharply increases as n increases and more slowly decreases as δ increases.

Keywords

Centipede gameCooperationPopulation dynamicsTrustTrust dilemmas

JEL classification

D81: Criteria for Decision-Making under Risk and Uncertainty C92: Laboratory, Group Behavior C72: Noncooperative Games
Type
Research Article
Information
Experimental Economics , Volume 9 , Issue 2 , June 2006 , pp. 147 - 166
Copyright
Copyright © 2006 Economic Science Association

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Footnotes

*

The thoughts and opinions expressed in this manuscript are solely those of the authors and do not necessarily reflect the views of the U.S. Government, the Department of Defense, or the United States Air Force.

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