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‰‰@‘è@F@Second Thought: Theory and Experiment in Social Dilemma

                           ƒ abstract

 

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.