Belot, M., Bhaskar, V. and van de Ven, J. (2012). Can observers predict trustworthiness? Review of Economics and Statistics, 94(1):246--259.
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Affiliated author
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Publication year2012
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JournalReview of Economics and Statistics
We investigate whether experimental subjects can predict behavior in a prisoner's dilemma played on a TV show. Subjects report probabilistic beliefs that a player cooperates, before and after the players communicate. Subjects correctly predict that women and players who make a voluntary promise are more likely to cooperate. They are able to distinguish truth from lies when a player is asked about her intentions by the host. Subjects are to some extent able to predict behavior; their beliefs are 7\textasciitilde{}percentage points higher for cooperators than for defectors. We also study their Bayesian updating. Beliefs do not satisfy the martingale property and display mean reversion.