Recent theoretical work shows that folk theorems can be developed for infinite overlapping genera-tions games. But, of course, there are other equilibria. Subjects both play the game and formu-late strategies. Our main finding is that subjects fail to exploit the intertemporal structure of the game. Economics Letters 62, 35-41.
Subjects are in groups that remain constant for a number of periods before they change.
The change is public knowledge and always consists of one member switching to another group. Moreover, everyone knows that this individual will not be grouped with any of the members again. In this sense 'partners' really become 'strangers'. We find considerable evidence of strategic behavior in these relatively simple games. Subjects who leave their group contribute less than in the previous period and less than in the next period in their new group.