Local and Group Interaction in Prisoners` Dilemmas

We experimentally study the effects of locality in a repeated prisoners' dilemma. We compare players located on a circle with those in neighbourless groups. On circles players interact only with neighbours, but not with distant players. In groups all players interact with each other in the same way. We observe less cooperation on circles than in (neighbourless) groups. This is explained through different learning behaviour and a different way to use cooperation as a signal.