Markov Simulation of an Iterated Prisoners’ Dilemma Experiment

We study cooperation and its development over the time in a repeated prisoner’s dilemma experiment with unknown length and unknown continuation probability. Subjects are re matched with new partners several times. The study examines the influence of past decisions to future behavior. In the simulation we raise the question whether the experimentally observed time pattern of cooperation can be reconstructed with a simple Markov model of individual behavior. The model parameters are inferred from the experimental data. The resulting Markov model is used to simulate experimental outcomes. Our model indicates that a simple Markov model can be used as a reasonable description of transition probabilities for successive states of cooperation.

Authors and Affiliations

1. Department for Management, Chair of Finance, University of Koblenz, Koblenz, Germany

   Thomas Burkhardt

2. Department for Informatics, Mathematics and Operations Research, University BW Munich, Munich, Germany

   Armin Leopold

3. Department of Statistics and Operations Research, University of Graz, Graz, Austria

   Ulrike Leopold-Wildburger

Corresponding author

Correspondence to Thomas Burkhardt .

Editors and Affiliations

1. Institut für, Betriebswirtschaftslehre, Universität Zürich, Moussonstrasse, Zurich, 8044, Switzerland

   Diethard Klatte

2. Inst. Operations Research, ETH Zürich, Rämistr. 101, Zürich, 8092, Switzerland

   Hans-Jakob Lüthi

3. Institut für, Betriebswirtschaftslehre, Universität Zürich, Moussonstrasse 15, Zurich, 8044, Switzerland

   Karl Schmedders

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