Where the payoffs of the static-game are given Table 1 and range from minimum
earnings of 10 to maximum earnings of 25 points. Realized efficiency ek ranges from 0 to
1. In particular, ek=0 when everyone in the economy always defect, and ek=1 when
everyone in the economy always cooperates. With personal punishment realized
efficiency can be negative, with a minimum of -1 when everyone always defects and
always punishes. The realized efficiencies for the four treatments in the experiment were
59.5%, 58.6%, 65.2%, and 81.5%, respectively.
Results 6 (selection of equilibrium). In all treatments, period 1 cooperation is
significantly different than zero. Hence, there is no evidence of coordination on the
inefficient outcome.
Table 4 provides evidence for Result 6. Choices in the first period of each economy
suggest whether some equilibrium among the many possible had a particularly strong
drawing power. One can examine how subjects coordinated in the initial period by
looking either at agreement of choices in the economy or in the pairwise match; see Table
5 in Appendix B. Either way, we can rule out that subjects attempted to coordinate on
defection. In particular, at least half of the economies started with full cooperation in two
treatments, public monitoring (non-anonymous) and private monitoring with punishment.
If we consider matches as the relevant unit of observation, both subjects cooperated in
more than 50% of the matches in every treatment.
Result 7 (strategy employed). There is evidence of use of reactive strategies in the
private monitoring treatment. Subjects who observed a defection by their opponent
switched from a cooperative mode to a punishment mode.
Table 5 (in Appendix B) and Figure 4 provide support for Result 7. Table 5 reports
the results from a probit regression that explains the individual choice to cooperate (1) or
not (0) using as regressors dummies that control for fixed effect (cycles, periods within
the cycle, individuals), as well as the duration of the previous cycle, and a set of six
regressors to trace the response of the representative subject to an observed defection. In
this manner we can understand the type of strategy employed by the representative
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