We study the emergence of norms of cooperation in experimental economies populated by strangers interacting indefinitely. Can these economies achieve full efficiency even without formal enforcement institutions? Which institutions for monitoring and enforcement facilitate cooperation? Finally, what classes of strategies do subjects employ? We find that, first, cooperation can be sustained even in anonymous settings; second, some type of monitoring and punishment institutions significantly promote cooperation; and, third, subjects mostly employ strategies that are selective in punishment.

Inexperienced women, along with economics and business majors, are much more susceptible to the winner’s curse, as are subjects with lower SAT/ACT scores. There are strong selection effects in bid function estimates for inexperienced and experienced subjects due to bankruptcies and bidders who have lower earnings returning less frequently as experienced subjects. These selection effects are not identified using standard econometric techniques but are identified through experimental treatment effects. Ignoring these selection effects leads to misleading estimates of learning.

We study social dilemmas in (quasi-) continuous-time experiments, comparing games with different durations and termination rules. We discover a stark qualitative contrast in behavior in continuous time as compared to previously studied behavior in discrete-time games: cooperation is easier to achieve and sustain with deterministic horizons than with stochastic ones, and end-game effects emerge, but subjects postpone them with experience. Analysis of individual strategies provides a basis for a simple reinforcement learning model that proves to be consistent with this evidence. An additional treatment lends further support to this explanation.