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Sticks and carrots: Two incentive mechanisms supporting intra-group cooperation

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  • Janus, Thorsten
  • Lim, Jamus Jerome

Abstract

In this note, we introduce two distinct incentive mechanisms that support dynamic intra-group cooperation in the context of prisoner's dilemma payoffs: rewards for cooperating, and punishments for defection, where the rewarding or punishing party may be outside the relationship.

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File URL: http://www.sciencedirect.com/science/article/B6V84-4V8VS63-1/2/0251287cb66a42ef7ea37e8b6ad8e31b
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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 102 (2009)
Issue (Month): 3 (March)
Pages: 177-180

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Handle: RePEc:eee:ecolet:v:102:y:2009:i:3:p:177-180

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Web page: http://www.elsevier.com/locate/ecolet

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Keywords: Intra-group cooperation Prisoner's dilemma;

References

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  1. Debraj Ray & Rajiv Vohra, 1998. "A Theory of Endogenous Coalition Structures," Working Papers 98-1, Brown University, Department of Economics, revised Jan 1998.
  2. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-64, July.
  3. B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
  4. Okada, Akira, 1993. " The Possibility of Cooperation in an n-Person Prisoners' Dilemma with Institutional Arrangements," Public Choice, Springer, vol. 77(3), pages 629-56, November.
  5. Ghatak, M. & Guinnane, T.W., 1998. "The Economics of Lending with Joint Liability: Theory and Practice," Papers 791, Yale - Economic Growth Center.
  6. Masahiko Aoki, 2001. "Toward a Comparative Institutional Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011875.
  7. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
  8. Engle-Warnick, Jim & Slonim, Robert L., 2004. "The evolution of strategies in a repeated trust game," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 553-573, December.
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Cited by:
  1. Panu Poutvaara & Mikael Priks, 2011. "Unemployment and gang crime: can prosperity backfire?," Economics of Governance, Springer, vol. 12(3), pages 259-273, September.

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