# 12-132/I (2012-12-04)

Anita Kopanyi-Peuker, University of Amsterdam; Theo Offerman, University of Amsterdam; Randolph Sloof, University of Amsterdam
prisoner's dilemma, cooperation, endogenous punishment
JEL codes:
D03, D81, D83

Forthcoming in 'Games and Economic Behavior'.

We consider the possibility that cooperation in a prisoner's dilemma is fostered by people's voluntarily enhancement of their own vulnerability. The vulnerability of a player determines the effectiveness of possible punishment by the other. In the "Gradual" mechanism, players may condition their incremental enhancements of their vulnerability on the other's choices. In the "Leap" mechanism, they unconditionally choose their vulnerability. In our experiment, subjects only learn to cooperate when either one of these mechanisms is allowed. In agreement with theory, subjects aiming for cooperation choose higher vulnerability levels in Gradual than in Leap, which maps into higher mutual cooperation levels.