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Thought: Theory and Experiment in Social Dilemma
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abstract
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This paper shows that second thought
is not an innocent device in our daily life, but is human wisdom that plays an
important role to resolve problems such as social dilemma. We design a simplest
possible mechanism to achieve Pareto efficiency in social dilemma, and then
compare the performance of the mechanism with and without second thought. First,
second thought changes the payoff structure of the game in favor of cooperation.
Second, the mechanism with second thought performs very well in experiment even
from period one. Third, the mechanism with second thought is robust against
deviation from rational choices.