Leaving the Prison: Permitting Partner Choice and Refusal in Prisoners Dilemma Games

We propose a simple rule of thumb on how to choose oneʹs game partner that allows economic agents who care about the future to learn to cooperate in the iterated prisonerʹs dilemma. This rule of thumb uses partner selection strategically to reward cooperative behavior and teach defectors a lesson. This reward and punishment scheme leads to higher payoffs of nonexploitive strategies and slowly converts defectors, who are attracted by the higher payoffs, into non-exploitive types. Simulations show that the convergence to stable cooperative behavior is rather fast.