The name is absent

Figure 5 illustrates the marginal effect on the frequency of cooperation in the periods
that followed an observed defection.¹⁴ The focus on the first five periods is for
convenience in showing patterns in the results. The representation for “any more than
five” periods is based on the marginal effect of the grim trigger regressor only. The
representation for periods 1 though 5 is based on the sum of the marginal effects of the
grim trigger regressor and the relevant tit-for-tat regressor. The L-shaped pattern of
response suggests a downward shift in cooperation levels immediately after a defection.
This shift appears to be persistent. The grim trigger regressor is significant at a 1% level,
and all other strategy regressors are significant at 10% level or more (Table 5).¹⁵

Result 8 (strategy employed). Two types of strategies were used in the private
monitoring with punishment treatment. Subjects who observed a defection by their
opponent sometimes employed personal punishment while staying in a cooperative mode.
Other times, they switched from a cooperative mode to a punishment mode.

Table 5 and Figure 6 provide support for the first part of Result 8. Similar to the
private monitoring treatment, Figure 6 (see footnote 13) suggests a downward shift in
cooperation levels following a defection, which is immediate and persistent. The grim
trigger regressor is significant at a 1% level (Table 5). In contrast to the private
monitoring treatment, the magnitude of the downward shift in cooperation levels is now
substantially lower.

One may conjecture that subjects sometimes continued cooperating but sanctioned
through personal punishment. Table 6 shows that most of the personal punishment was
given by cooperators when their opponent defected. In about 58% of such encounters, the
cooperator requested personal punishment be inflicted on the opponent.

¹⁴ Figure 5 is based on Table 5 using the coefficient estimates coding reactive strategies. Period 0 is
exogenously set at 0%. The point for “any more than 5” is the marginal effect on the frequency of
cooperation of the grim trigger regressor. Periods 1 through 5 are the sum of two marginal effects on the
frequency of cooperation, the effect of the grim trigger regressor plus the proper tit-for-tat regressor (i.e.
coding reaction one period after the observed defection for period 1, coding reaction two periods after the
observed defection for period 2, etc.). Marginal effects for the tit-for-tat regressors are computed for grim
trigger regressor set at 1 (i.e. defection)

Table 6 reports that the actual length of the previous cycle influenced the propensity of participants to
cooperate—the longer the previous cycle, the higher the current cooperation level. This confirms the
finding reported in Aoyagi and Frechette (2003) and Engle-Warnick and Slonim (2004).

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