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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. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
  2. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, Springer, vol. 10(2), pages 171-178, June.
  3. Kräkel, Matthias & Nieken, Petra & Przemeck, Judith, 2008. "Risk Taking in Winner-Take-All Competition," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 233, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  4. 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.
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  6. 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, MIT Press, vol. 99(3), pages 507-21, August.
  7. Friedman, J W, 1969. "On Experimental Research in Oligopoly," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 36(108), pages 399-415, October.
  8. Shlomi Dinar, 2009. "Scarcity and Cooperation Along International Rivers," Global Environmental Politics, MIT Press, MIT Press, vol. 9(1), pages 109-135, February.
  9. Urs Fischbacher & Christian Thöni, . "Excess Entry in an Experimental Winner-Take-All Market," IEW - Working Papers 086, Institute for Empirical Research in Economics - University of Zurich.
  10. Nicholas Bardsley & Peter Moffatt, 2007. "The Experimetrics of Public Goods: Inferring Motivations from Contributions," Theory and Decision, Springer, Springer, vol. 62(2), pages 161-193, March.
  11. Vernon L. Smith, 1962. "An Experimental Study of Competitive Market Behavior," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 70, pages 111.
  12. 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.
  13. 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.
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Cited by:
  1. Lotito, Gianna & Migheli, Matteo & Ortona, Guido, 2011. "Is cooperation instinctive? Evidence from the response times in a Public Goods Game," POLIS Working Papers, Institute of Public Policy and Public Choice - POLIS 161, Institute of Public Policy and Public Choice - POLIS.

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