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Competition and cooperation in markets. The experimental case of a winner-take-all setting

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  • Ottone, Stefania
  • Ponzano, Ferruccio

Abstract

The aim of this experiment is twofold. First of all, we want to investigate whether a winner-take-all scenario where subjects with homogeneous skills meet more than once stimulates subjects' cooperation. Secondly, we want to compare agents' tendency to cooperate in settings with different levels of competition. We ran three treatments. The first one reproduces the classical public good game. The second environment represents a perfect competition market, while in the third treatment we consider a winner-take-all market. The most relevant result we obtain is that while perfect competition forces players to be efficient and to behave as they were self-interested, a winner-take-all market induces strategic cooperation.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 39 (2010)
Issue (Month): 2 (April)
Pages: 163-170

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Handle: RePEc:eee:soceco:v:39:y:2010:i:2:p:163-170

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Web page: http://www.elsevier.com/locate/inca/620175

Related research

Keywords: Cooperation Competition Public good Risk aversion Winner-take-all market;

References

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  1. Fischbacher, Urs & Thöni, Christian, 2008. "Excess entry in an experimental winner-take-all market," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 150-163, July.
  2. Friedman, J W, 1969. "On Experimental Research in Oligopoly," Review of Economic Studies, Wiley Blackwell, vol. 36(108), pages 399-415, October.
  3. Knetsch, Jack L & Sinden, J A, 1984. "Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value," The Quarterly Journal of Economics, MIT Press, vol. 99(3), pages 507-21, August.
  4. Ananish Chaudhuri & Sara Graziano & Pushkar Maitra, 2006. "Social Learning and Norms in a Public Goods Experiment with Inter-Generational Advice -super-1," Review of Economic Studies, Oxford University Press, vol. 73(2), pages 357-380.
  5. Ledyard, John O., . "Public Goods: A Survey of Experimental Research," Working Papers 861, California Institute of Technology, Division of the Humanities and Social Sciences.
  6. Vernon L. Smith, 1962. "An Experimental Study of Competitive Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 70, pages 322.
  7. Matthias Kräkel & Petra Nieken & Judith Przemeck, 2008. "Risk Taking in Winner-Take-All Competition," Bonn Econ Discussion Papers bgse7_2008, University of Bonn, Germany.
  8. Christoph Engel, 2006. "How Much Collusion. A Meta-Analysis On Oligopoly Experiments," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2006_27, Max Planck Institute for Research on Collective Goods.
  9. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
  10. Nicholas Bardsley & Peter Moffatt, 2005. "The Experimetrics of Public Goods: Inferring Motivations from Contributions," Discussion Papers 2005-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  11. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  12. Ernst Fehr & Klaus M. Schmidt, . "Theories of Fairness and Reciprocity - Evidence and Economic Applications," IEW - Working Papers 075, Institute for Empirical Research in Economics - University of Zurich.
  13. Shlomi Dinar, 2009. "Scarcity and Cooperation Along International Rivers," Global Environmental Politics, MIT Press, vol. 9(1), pages 109-135, February.
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Cited by:
  1. Gianna Lotito & Matteo Migheli & Guido Ortona, 2013. "Is cooperation instinctive? Evidence from the response times in a public goods game," Journal of Bioeconomics, Springer, vol. 15(2), pages 123-133, July.

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