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Reputation or Reciprocity? An Experimental Investigation

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  • Simon Gaechter
  • Armin Falk

Abstract

Recent evidence highlights the importance of social norms in many economic relations. However, many of these relationships are long-term and provide repeated game incentives for performance. We experimentally investigate interaction effects of reciprocity and repeated game incentives in two treatments (one-shot and repeated) of a gift-exchange game. In both treatments we observe reciprocity, which is strengthened in the repeated game. A detailed analysis shows that in the repeated game some subjects imitate reciprocity. Thus, reciprocity and repeated game incentives reinforce each other. Observed behaviour is robust against experience. We conclude that a long-term interaction is a reciprocity-compatible contract enforcement device.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 496.

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Date of creation: 2001
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Handle: RePEc:ces:ceswps:_496

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Keywords: Reciprocity; reputation; repeated games; incomplete contracts;

References

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  24. Abbink, Klaus & Bernd Irlenbusch & Elke Renner, 1997. "The Moonlighting Game - An Experimental Study on Reciprocity and Retribution," Discussion Paper Serie B, University of Bonn, Germany 415, University of Bonn, Germany.
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Cited by:
  1. Francesco Rullani, 2005. "The Debate and the Community. “Reflexive Identity” in the FLOSS Community," LEM Papers Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy 2005/18, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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