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Soft transactions

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  • Jeitschko, Thomas D.
  • Lau, C. Oscar

Abstract

This paper considers “soft debt” as a social convention that facilitates long-term reciprocal relationships. A player is said to follow a soft debt strategy if his decisions depend on the entire history with his counterpart only through their accrued soft debt balance. Under discrete benefits, there exist equilibria in which the players keep reciprocating as long as the debt balance does not exceed a certain limit.

Suggested Citation

  • Jeitschko, Thomas D. & Lau, C. Oscar, 2017. "Soft transactions," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 122-134.
    • Handle: RePEc:eee:jeborg:v:141:y:2017:i:c:p:122-134
    DOI: 10.1016/j.jebo.2017.06.003
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    References listed on IDEAS

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    Cited by:

    1. Lau, C. Oscar, 2022. "Travel Circle: A Model of Supply Chains," MPRA Paper 115291, University Library of Munich, Germany.

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    More about this item

    Keywords

    Social interactions; Reciprocity; Soft debt; Soft transaction; Favor-trading;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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