Probability Biases in Repeated Prisoner’s Dilemma Game

Last registered on June 21, 2022

Pre-Trial

Trial Information

General Information

Title
Probability Biases in Repeated Prisoner’s Dilemma Game
RCT ID
AEARCTR-0009613
Initial registration date
June 20, 2022

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
June 21, 2022, 10:59 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Primary Investigator

Affiliation
University of Warwick

Other Primary Investigator(s)

Additional Trial Information

Status
Completed
Start date
2019-02-03
End date
2019-02-17
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This paper provides evidence that biases attributed to the perception of probabilities affect cooperation levels in repeated games. In an experiment, subjects completed a prisoner’s dilemma game that continued to the next round with a fixed probability. Under the standard assumption of (constant) discounted expected utility, such a probability can be interpreted as time discounting. The presence of probability biases leads to deviations from constant discounting, as shown in Halevy (2008, AER), which then affects the evaluation of the outcomes in the game and, the hypothesis is that this affects the cooperate-defect decision of subjects. Using an incentive-compatible mechanism based on scoring rules, I quantify the direction and magnitude of subjects’ probability bias. I nd that 53% of subjects are expected utility (EU) subjects; 21% of subjects reveal biases that accord with prospect theory: small probabilities are overweighted and medium to large ones are underweighted (inverse-S); 26% of subjects underestimate small probabilities and overestimate large probabilities (S-shape). The main finding is that the cooperation level is correlated with the type of biases. Specifically, for all continuation probabilities, inverse-S subjects cooperate more than EU subjects, and S-shape subjects cooperate less than EU subjects. I explain this behaviour in the repeated games by adopting Halevy’s impatience index.
External Link(s)

Registration Citation

Citation
Yeganloo, Atiyeh. 2022. "Probability Biases in Repeated Prisoner’s Dilemma Game." AEA RCT Registry. June 21. https://doi.org/10.1257/rct.9613
Experimental Details

Interventions

Intervention(s)
The experiment consists of two parts, a game experiment and a elicitation experiment. In the game experiment, I test cooperation levels in repeated PD games. The hypothesis is that biases in the treatment of probabilities may affect cooperation levels. The controls for the type of bias will be extracted from the elicitation experiment on individual choice, where I implement a procedure based on scoring rules. I present the design of games and individual choice part next.
Intervention Start Date
2019-02-03
Intervention End Date
2019-02-17

Primary Outcomes

Primary Outcomes (end points)
Cooperation, and probability biases.
Subjects’ probability biases predict their cooperation in the first round for low and moderate continuation probabilities.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The experiment consists of two parts, a game experiment and a elicitation experiment. In the game experiment, I test cooperation levels in repeated PD games. The hypothesis is that biases in the treatment of probabilities may affect cooperation levels. The controls for the type of bias will be extracted from the elicitation experiment on individual choice, where I implement a procedure based on scoring rules. I present the design of games and individual choice part next.
Experimental Design Details
Randomization Method
randomization done in office by a computer
Randomization Unit
individual
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
104 university students
Sample size: planned number of observations
104 university students
Sample size (or number of clusters) by treatment arms
Treatment 1 (36 students).
Treatment 2 (32 students).
Treatment 3 (36 students).
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials