Apr 28, 2012

Cooperation when stakes are large

We examine cooperative behavior when large sums of money are at stake, using data from the TV game show “Golden Balls”. At the end of each episode, contestants play a variant on the classic Prisoner’s Dilemma for large and widely ranging stakes averaging over $20,000. Cooperation is surprisingly high for amounts that would normally be considered consequential but look tiny in their current context, what we call a “big peanuts” phenomenon. Utilizing the prior interaction among contestants, we find evidence that people have reciprocal preferences. Surprisingly, there is little support for conditional cooperation in our sample. That is, players do not seem to be more likely to cooperate if their opponent might be expected to cooperate. Further, we replicate earlier findings that males are less cooperative than females, but this gender effect reverses for older contestants because men become increasingly cooperative as their age increases.
That is the abstract of the new paper "Split or Steal? Cooperative Behavior When the Stakes Are Large" by van den Assem, van Dolder, and Thaler (January 2012).
The authors explain:
In the current paper, we study cooperative behavior using another source of data, namely the behavior of contestants on the British TV game show “Golden Balls”. Although the game show setting is an unusual environment, it has the benefit of employing large and varying stakes. Furthermore, game shows are markedly different from laboratory experiments in terms of participant selection, scrutiny, and familiarity of participants with the decision task. Combined with the strict and well- defined rules, game shows can therefore provide unique opportunities to investigate the robustness of existing laboratory findings . . . .  (p. 3).
In the final stage of “Golden Balls”, contestants make a choice on whether or not to cooperate in a variant of the famous Prisoner’s Dilemma. In particular, the two final contestants independently have to decide whether they want to “split” or “steal” the jackpot. If both contestants choose “split”, they share the jackpot equally. If one chooses “split” and the other chooses “steal”, the one who steals takes the jackpot and the other gets nothing. If they both “steal”, both go home empty-handed. On average, the jackpot is over $20,000. The variation is large: from a few dollars to about $175,000 (p. 3).
A graph from the paper (p. 16):

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