BooksSome material related to actual experiments run in IIIE and relevant readings are available here.
https://sites.google.com/site/azresearchgroup/texts/exp-econ-course/prisoner
Look at relevant chapters from BOOKS
The basic game is as follows. Everyone contributes some money to a pool. The money in the pool gets doubled (or multiplied by some gain factor). Then it is redistributed among the contributors. Again the goal is to study the difference between what Economic Theory predicts and what actually happens. This game can be used as a model for MANY different economic situations. Most commonly, it is used for PUBLIC GOODS.
KEY THEORETICAL CONCEPT: Marginal Social Benefit is higher than Marginal Private Benefit. Contribution creates benefits for all so SOCIAL BENEFIT is high. The share of this benefit to individual is low. Typically, Marginal Private Benefit is NEGATIVE -- you actually lose money from contributions, BUT society as a whole gains. If everybody contributes than everybody benefits.
What does economic theory predict? Zero contributions. If there are contributions to a trusted party, then that party should return NOTHING back.
What actually happens? Contributions are always greater than zero. Returns are always greater than zero.
WHY is there conflict between theory and observation?
What are the factors that lead to increased cooperation, increased contributions, increased TRUST in company?
What are factors that REDUCE trust cooperation, and thereby reduce SOCIAL welfare?
How can we change things from LOW trust situations to get to HIGH trust? In particular, how did the Prophet S.A.W. create cooperation and trust among the Muslims who were initially divided into warring tribes?
Prisoners Dilemma, Trust Games, and Musharka Financing - Video Lecture on my personal website asadzaman.net