Cooperation in an overlapping generations experiment

Recent theoretical work shows that folk theorems can be developed for infin ite overlapping generations games. Cooperation in such games can be sustain ed as a Nash equilibrium. But, of course, there are other equilibria. This paper investigates experimentally whether cooperation actually occurs in a simple overlapping generations game. Subjects both play the game and formul ate strategies. Our main finding is that subjects fail to exploit the inter temporal structure of the game. Even when we provided subjects with a recom mendation to play the grim trigger strategy, most of the subjects still emp loyed safe history-independent strategies. (C) 2001 Academic Press.