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Cooperation over finite horizons: A theory and experiments

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  • Ambrus, Attila
  • Pathak, Parag A.

Abstract

This paper shows that the presence of different types of players - those who only care about their own material payoffs and those who reciprocate others' contributions - can explain the robust features of observed contribution patterns in public good contribution games, even without the presence of asymmetric information. We show what conditions on reciprocity are sufficient for a unique perfect equilibrium, in which contributions are decreasing. Under these conditions, selfish players have enough future benefits to induce subsequent contributions by reciprocal players, and this incentive diminishes as the end of the game approaches. The model explains the puzzling restart effect and is consistent with various other empirical findings. We also report the results of a series of experiments, using a probabilistic continuation design in which after each set of 10-period games, the group is restarted with low probability. We find specific support for the theory in our data, including that selfish players (identified exogenously) stop contributing earlier than reciprocal players, as directly implied by the model.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 95 (2011)
Issue (Month): 7-8 (August)
Pages: 500-512

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Handle: RePEc:eee:pubeco:v:95:y:2011:i:7-8:p:500-512

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Web page: http://www.elsevier.com/locate/inca/505578

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Keywords: Public goods Restart effect;

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References

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Citations

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Cited by:
  1. Urs Fischbacher & Simon Gaechter, 2009. "The behavioral validity of the strategy method in public good experiments," Discussion Papers, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham 2009-25, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Jasmina Arifovic & John Ledyard, 2012. "Individual Evolutionary Learning, Other-regarding Preferences, and the Voluntary Contributions Mechanism," Discussion Papers wp12-01, Department of Economics, Simon Fraser University.
  3. Attila Ambrus & Ben Greiner & Parag Pathak, 2009. "Group Versus Individual Decision-Making: Is there a shift?," Economics Working Papers, Institute for Advanced Study, School of Social Science 0091, Institute for Advanced Study, School of Social Science.
  4. Arifovic, Jasmina & Ledyard, John, 2012. "Individual evolutionary learning, other-regarding preferences, and the voluntary contributions mechanism," Journal of Public Economics, Elsevier, Elsevier, vol. 96(9-10), pages 808-823.
  5. Elias L. Khalil, 2012. "The One who Gives Too Early, Gives Twice: Cooperation, Blood Feuds and Third-Party Institutions," Development Research Unit Working Paper Series, Monash University, Department of Economics 24-12, Monash University, Department of Economics.
  6. Anna Conte & M. Levati, 2014. "Use of data on planned contributions and stated beliefs in the measurement of social preferences," Theory and Decision, Springer, Springer, vol. 76(2), pages 201-223, February.
  7. Urs Fischbacher & Simon Gaechter, 2009. "Social Preferences, Beliefs, and the Dynamics of Free Riding in Public Good Experiments," Discussion Papers, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham 2009-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  8. Johnsen, Åshild A & Kvaløy, Ola, 2014. "You always meet twice: An experiment on intrinsic versus instrumental reciprocity," UiS Working Papers in Economics and Finance 2014/2, University of Stavanger.
  9. Herbert Gintis, 2011. "The future of behavioral game theory," Mind and Society: Cognitive Studies in Economics and Social Sciences, Fondazione Rosselli, Fondazione Rosselli, vol. 10(2), pages 97-102, December.
  10. Kocher, Martin G. & Martinsson, Peter & Myrseth, Kristian Ove R. & Wollbrant, Conny, 2012. "Strong, Bold, and Kind: Self-Control and Cooperation in Social Dilemmas," Working Papers in Economics 523, University of Gothenburg, Department of Economics, revised 02 Apr 2013.
  11. Eva Ranehill & Frédéric Schneider & Roberto A. Weber, 2014. "Growing Groups, Cooperation, and the Rate of Entry," CESifo Working Paper Series 4719, CESifo Group Munich.
  12. Ananish Chaudhuri, 2011. "Sustaining cooperation in laboratory public goods experiments: a selective survey of the literature," Experimental Economics, Springer, Springer, vol. 14(1), pages 47-83, March.

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