On The Economic Value of Repeated Interactions Under Adverse Selection
AbstractThe paper studies, in a repeated interaction setting, how the presence of cooperative agents in a heterogeneous community organized in groups affects efficiency and group stability. The paper expands on existing literature by assuming that each type can profitably mimic other types. It is shown that such enlargement of profitable options prevents group stabilization in the single group case. Stabilization can be obtained with many groups, but its driver is not the efficiency gain due to the presence of cooperative individuals. Rather, stabilization is the result of free riding opportunities.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2006.73.
Date of creation: May 2006
Date of revision:
Adverse Selection; Group Stability; Altruism;
Other versions of this item:
- Ottorino Chillemi & Benedetto Gui & Lorenzo Rocco, 2005. "On the economic value of repeated interactions under adverse selection," "Marco Fanno" Working Papers 0007, Dipartimento di Scienze Economiche "Marco Fanno".
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-21 (All new papers)
- NEP-MIC-2006-07-21 (Microeconomics)
- NEP-SOC-2006-07-21 (Social Norms & Social Capital)
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