HISTORY EFFECTS IN SOCIAL DILEMMA SITUATIONS

Abstract

It is well known that the `shadow of the future' affects behavior in social dilemma situations such as the Prisoner's Dilemma or the Trust Game (e.g. Axelrod 1984). How past experience, stemming from interactions with other subjects (`history' or `shadow of the past'), is influencing a subject's current behavior in social dilemma situations is less well known. In this article, we distinguish between situations with and without such a history. The simple theory we lay out here predicts no effects of the past on current behavior in dilemma situations. However, we present experimental evidence on behavior in social dilemma situations that is in conflict with this theory, revealing that history effects do indeed influence a subject's behavior. Two main elaborations of the theory are suggested which stem from the past of these dilemma situations, namely, additional and more complex utility arguments and additional and more complex information structures. We discuss how these arguments can be taken into account, leading to a more accurate analysis of behavior in social dilemma situations.