The name is absent

defection appears to have no reversal trend (i.e., we see little evidence of time-dependent
strategies). Although this observation may suggest that simplicity plays a role in the
selection of strategies, we also observe the use of more complex strategies that involve
several contingencies, such as targeted strategies.

The widespread use of personal punishment also deserves some discussion. Through
personal punishment, a subject can directly and immediately lower the earnings of her
opponent, which is not a best response for a self-regarding, rational agent (proposition 3).
In the experiment, however, availability of personal punishment remarkably increased
aggregate cooperation from the very first period. One can think of several reasons for the
use of personal punishment. One is reciprocity because a subject may be happy to pay a
cost to lower her opponent’s earnings in order to reciprocate for her defection. In this
manner she avoids harming cooperators through punishing only those who have been
unkind. Under private monitoring, a reciprocator had no other equilibrium strategy with
comparable selectivity in punishing defectors.²⁴ Another reason is simplicity because
personal punishment neither requires knowledge of others’ strategies nor coordination on
some informal punishment scheme. Moreover, personal punishment is unavoidable.
When using a reactive strategy, instead, punishing by defecting is uncertain because the
interaction could suddenly end. A final reason for using personal punishment involves
using a channel of costly communication, which may have helped in coordinating (e.g.,
see Cooper et al., 1996, Crawford, 1998, Van Huyck et. al, 2002).

A tentative conclusion is thus that cognitive costs may play a minor role in driving
strategy choice, while other-regarding preferences may be more relevant. We plan to
tackle this issue in future work.

²⁴ If the subject uses a reactive strategy, she will punish the defector in future periods. Moreover, others in
the economy will eventually punish that defector.

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