Extortion subdues human players but is finally punished in the prisoner's dilemma.

Abstract

Extortion is the practice of obtaining advantages through explicit forces and threats. Recently, it was demonstrated that even the repeated prisoner's dilemma, one of the key models to explain mutual cooperation, allows for implicit forms of extortion. According to the theory, extortioners demand and receive an excessive share of any surplus, which allows them to outperform any adapting co-player. To explore the performance of such strategies against humans, we have designed an economic experiment in which participants were matched either with an extortioner or with a generous co-player. Although extortioners succeeded against each of their human opponents, extortion resulted in lower payoffs than generosity. Human subjects showed a strong concern for fairness: they punished extortion by refusing to fully cooperate, thereby reducing their own, and even more so, the extortioner's gains. Thus, the prospects of extorting others in social relationships seem limited; in the long run, generosity is more profitable.