The name is absent

Result 11 (strategy employed). Subjects employed grim trigger strategies and did not
revert to a cooperative mode. In all treatments a defection of an opponent triggered a
persistent decrease in cooperation. In particular, following a defection, economies in
public monitoring treatments did not appear to revert to a cooperative mode.

While in private monitoring treatments, cooperation could be supported only through
grim trigger strategies; in public monitoring treatments cooperation could also be
supported through T-period trigger strategies.²⁰ Regression results from Table 5 allow us
to detect if such type of strategies were actually employed. In that circumstance one
should see after T period from a defection a full “recovery” to pre-defection cooperation
levels. However, no such recovery can be detected from Figures 7 and 8. This is
consistent with previous findings in different settings (Mason and Phillips, 2002). After
an initial drop, one period after the defection, one should observe an upward trend in the
marginal effect curves of Figure 7 and 8. Instead, the curves look generally flat.

6 Final Remarks

We studied long-run equilibria in experimental economies composed by strangers
who play indefinitely a prisoners’ dilemma in pairs. Subjects are randomly matched and
cannot directly communicate, and their identities and histories are private information.
Achieving cooperation in this setting is difficult because subjects can neither commit to
cooperation nor enforce it, especially because opponents vary randomly over time.
Contrary to our expectations, we found that subjects did overcome these hurdles and
cooperated at high and increasing rates (private monitoring treatment). This result
provides empirical support to the well-known theoretical results of Kandori (1992) and
Ellison (1994), who specify conditions under which cooperation is an equilibrium of
infinitely repeated games among strangers. Our empirical finding is a novel contribution
given the weak evidence provided on this point by previous experimental studies
(Schwartz et al., 1999; Duffy and Ochs, 2006).

²⁰ At the end of each period, everyone observes the random draw. That number can be used as a
coordination device. In particular, even in private monitoring subjects could coordinate a reversion to
cooperation using that publicly observed number.

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