Research

"The Importance of Being Even: Restitution and Cooperation"  (Draft)

(with Maria Bigoni, Marco Casari, Andrzej Skrzypacz, Giancarlo Spagnolo)

We study – empirically and theoretically – how restitution helps restore cooperation. After a breach, restitution strategies “propose” returning to cooperation by cooperating against defection, and condition actions on the balance between the cooperation given and received. We reanalyze experimental data from three classes of repeated games and find compelling empirical support for restitution strategies in general and for a strategy we named Payback in particular. Considering restitution strategies enables to resolve discrepancies between theory and experiments emerging from prior literature - such as the prevalent use of non-equilibrium strategies like Tit-for-tat - and questions the predominance of memory-one strategies.

"Choice by Associations" (Draft coming soon)

(with Jose Apesteguia and Francesco Cerigioni)

It has been amply shown that choice behavior is context-dependent. Evidence from the cognitive sciences suggests that such dependency might be driven by implicit associations. In this paper, we propose and study a choice-based model of contextual associations. We start by formalizing contexts by the set of concepts it contains. We then introduce associations by way of the implicit relationship between alternatives and concepts, which directly impacts the utility evaluation of alternatives. We study the empirical content of the model, its comparative statics, and several variations of the model. We argue that the model could be instrumental in understanding a wide range of phenomena, and derive new predictions.

"The trade-off between strategic risk and value of cooperation" 

In this paper, I explore the trade-off between efficiency and strategic risk in the context of a repeated prisoner’s dilemma with imperfect public monitoring. Since with imperfect monitoring deviations can happen on the equilibrium path, to keep the value of cooperation high, players have to adopt more ``lenient” and ``forgiving” strategies, being more exposed to opportunistic behavior. For a broad class of one-dimensional public signals, I show that the maximal payoff achievable under a (symmetric) cooperative risk-dominant equilibrium is strictly lower than the maximal symmetric equilibrium payoff. Contrary to the perfect monitoring case, this holds even when the discount factor converges to 1. In a related experiment I test whether risk-dominance prevails over Pareto dominance as an equilibrium selection theory for predicting (i) whether subjects cooperate at all and (ii) which strategy they adopt conditional on deciding to cooperate.

"Endogenous Choice of the Institution: the role of Signaling and Self-Projection"