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Waiting To Cooperate?

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  • Todd R. Kaplan

    ()
    (University of Exeter, University of Haifa)

  • Bradley J. Ruffle

    ()
    (Wilfrid Laurier University, Ben-Gurion University)

  • Ze’ev Shtudiner

    ()
    (Ariel University)

Abstract

Sometimes cooperation between two parties requires exactly one to cede to the other. If the decisions whether to cede are made simultaneously, then neither or both may acquiesce leading to an inefficient outcome. However, inefficiency may be avoided if a party can wait to see what the other does. We experimentally test whether adding a waiting option to such a two-player cooperation game enhances cooperation. Although subjects cede less overall with the waiting option, we show that they coordinate more and consequently achieve higher profits. Yet, a dark side overhangs waiting: the least cooperative pairs do worse with this option. They wait not to facilitate coordination but to disguise their entry.

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Paper provided by Ben-Gurion University of the Negev, Department of Economics in its series Working Papers with number 1314.

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Length: 27 pages
Date of creation: 2013
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Handle: RePEc:bgu:wpaper:1314

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  8. MiguelA. Fonseca & Hans-Theo Normann, 2008. "Mergers, Asymmetries and Collusion: Experimental Evidence," Economic Journal, Royal Economic Society, vol. 118(527), pages 387-400, 03.
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