Instability of Defection in the Prisoner’s Dilemma Under Best Experienced Payoff Dynamics

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Journal of Economic Theory 197 (), 105174

Abstract

We study population dynamics under which each revising agent tests each action k times, with each trial being against a newly drawn opponent, and chooses the action whose mean payoff was highest during the testing phase. When k = 1, defection is globally stable in the prisoner's dilemma. By contrast, when k > 1 we show that, if the gains from defection are not too large, there exists a globally stable state in which agents cooperate with probability between 28% and 50%. Next, we characterize stability of strict equilibria in general games. Our results demonstrate that the empirically plausible case of k > 1 can yield qualitatively different predictions than the case k = 1 commonly studied in the literature.

JEL classification

C72, C73

Keywords

Learning; Cooperation; Best experienced payoff dynamics; Sampling equilibrium; Evolutionary stability.