Leaving the Prison: Permitting Partner Choice and Refusal in Prisoner's Dilemma Games

We propose a simple rule of thumb on how to choose one's game partner thatallows economic agents who care about the future to learn to cooperate inthe iterated prisoner's dilemma. This rule of thumb uses partner selectionstrategically to reward cooperative behavior and teach defectors a lesson.This reward and punishment scheme leads to higher payoffs of non-exploitivestrategies and slowly converts defectors, who are attracted by the higherpayoffs, into non-exploitive types. Simulations show that the convergence tostable cooperative behavior is rather fast.