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Keynes Fund

 

Project Summary


Repeated games involve strategic interactions where economic agents interact for long periods of time.

Models of repeated games have been applied to a wide range of economic settings from oligopolistic competition to the development of social norms. In virtually all repeated interactions there is a plethora of equilibria that can sustain opportunistic as well as cooperative behaviour. A vast body of theoretical work on repeated games provides precise characterisation of the set of equilibrium payoffs; however, few studies have proposed specific predictions about behaviour (see, e.g., Dal Bó and Fréchette (2011), and Dal Bó and Fréchette (2019)).

The research will help develop a better understanding of human behaviour in repeated interactions. Specifically, the two studies will explore how play develops over the course of the repeated interaction when the circumstances of choice-making and the information structure change. Methodologically, the studies will combine standard and behavioural game theory as well as collection and analysis of carefully designed experiments. The first project will apply recently developed strategy elicitation methods to identify which strategies people actually use when they can (to some extent) commit to their strategies.

The second project will examine how people decide whether to cooperate in a repeated experimental setting where they can observe not only their opponent's behaviour but also information about others’ behaviour and/or payoffs. Using several variations of the information people can observe, we will study what effect behaviour and incentives, separately and together, have on learning optimal strategies and the emergence of cooperation.

The results will provide a better understanding of how people, organizations, and societies behave when interacting strategically and repeatedly. The appeal of studying people’s different behaviours in repeated interactions goes beyond the academic interest of economists working in this field and will appeal to a broad audience. Importantly, having a better understanding of people’s behaviour can translate into better policy decisions and implementations; in particular, building on these results policy makers could target specific change in behaviour more carefully and more effectively.

The broader impacts of this research include contributions to the understanding of the effect of social information on incentives and cooperative behaviour as well as the role of limited commitment. Both information and commitment can have a profound impact on the design of intuitions that aim to foster efficient cooperation in markets and societies. It will also help strengthen ties between economic theorists and experimenters interested in explaining behavioral patterns typically observed in markets. In the long run, we are hopeful that the proposed research will enhance our understanding of how and when social information dissemination may lead to cooperation. This is of fundamental importance in many subfields of social science. The ability to commit is also a key issue in the evolution of cooperation and the predicted outcomes observed in strategic interactions.

 

 

Dr. Juan Block and Dr. Frédéric-Guillaume Schneider

 

Dr Juan Block is a Janeway Fellow in Economics at the Faculty of Economics, and Greta Burkill Fellow and College Lecturer in Economics at Murray Edwards College, University of Cambridge. He specialises in Microeconomic Theory, with a particular interest in Game Theory.

 

Dr Frédéric-Guillaume Schneider is Senior Research Associate (Economics & Policy) at the Cambridge Judge Business School, University of Cambridge. Her research are in Behavioral Economics, Experimental Economics, Organizational/Labor/Personnel Economics.

 

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