PRISONERS-DILEMMA AS A GAME WITH INCOMPLETE INFORMATION

The Prisoners' Dilemma is reformulated as a game (with incomplete information) between players of different 'moral standards'. Equilibrium solutions are computed for games with simultaneous choices and for games with sequential choices. Cooperation should occur more frequently in the latter. Experiments are conducted with both types of games. The results can neither be explained by (linear) altruistic utility functions nor by a revaluation of the cooperative choices. They can be explained, however, by a revaluation of the cooperative result. In this case we get an extreme distribution of the 'moral standards'. Expressed as monetary values and compared with the monetary rewards of the game there seems to be one class of persons with rather high standards, another class of persons with rather low standards, and practically no intermediate cases. The rejection of altruistic utility functions as well as the rejection of certain norms of behavior have important consequences for the implementation of altruism, norms and morals in formal models of decision making. © 1990.