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 that allows economic agents who care about the future to learn to cooperate in the iterated prisoner's dilemma. This rule of thumb uses partner selection strategically to reward cooperative behavior and teach defectors a lesson. This reward and punishment scheme leads to higher payoffs of non-exploitive strategies and slowly converts defectors, who are attracted by the higher payoffs, into non-exploitive types. Simulations show that the convergence to stable cooperative behavior is rather fast.