KRANNERT SCHOOL OF MANAGEMENT Purdue University West Lafayette, Indiana Cooperative Strategies in Groups of Strangers: An Experiment By Gabriele Camera Marco Casari Maria Bigoni Paper No. 1237 Date: June, 2010 Institute for Research in the Behavioral, Economic, and Management Sciences Cooperative strategies in groups of strangers: an experiment Gabriele Camera, Marco Casari, and Maria Bigoni* 15 June 2010 * Camera: Purdue University; Casari: University of Bologna, Piazza Scaravilli 2, 40126 Bologna, Italy, Phone: +39- 051-209-8662, Fax: +39-051-209-8493,
[email protected]; Bigoni: University of Bologna, Piazza Scaravilli 2, 40126 Bologna, Italy, Phone: +39-051-2098890, Fax: +39-051-0544522,
[email protected]. We thank Jim Engle-Warnick, Tim Cason, Guillaume Fréchette, Hans Theo Normann, and seminar participants at the ESA in Innsbruck, IMEBE in Bilbao, University of Frankfurt, University of Bologna, University of Siena, and NYU for comments on earlier versions of the paper. This paper was completed while G. Camera was visiting the University of Siena as a Fulbright scholar. Financial support for the experiments was partially provided by Purdue’s CIBER and by the Einaudi Institute for Economics and Finance. Abstract We study cooperation in four-person economies of indefinite duration. Subjects interact anonymously playing a prisoner’s dilemma. We identify and characterize the strategies employed at the aggregate and at the individual level. We find that (i) grim trigger well describes aggregate play, but not individual play; (ii) individual behavior is persistently heterogeneous; (iii) coordination on cooperative strategies does not improve with experience; (iv) systematic defection does not crowd-out systematic cooperation.