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Do the Selfish Mimic Cooperators? Experimental Evidence from Finitely-Repeated Labor Markets

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  • Roe, Brian E.

    ()
    (Ohio State University)

  • Wu, Steven Y.

    ()
    (Purdue University)

Abstract

Experimental studies have consistently shown that cooperative outcomes can emerge even in finitely repeated games. Such outcomes are justified by existing reputation building models, which suggest that cooperative outcomes can be sustained if some subjects have other-regarding preferences. While the existence of other-regarding preferences is typically used to justify experimental outcomes, we are unaware of empirical studies that explicitly examine the interaction between cooperators (those with other-regarding preferences) and selfish subjects in sustaining cooperation. In this paper, we classify subjects as either selfish or cooperative using simple social preference games and then test for behavioral differences between the two types in a finitely-repeated labor market with unenforceable worker effort. Theory predicts, and our data confirms, that (1) selfish players mimic the actions of cooperators when trading partners can track the individual reputation of past partners and (2) selfish and cooperative types act differently when individual reputations cannot be tracked.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4084.

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Length: 37 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4084

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Related research

Keywords: contracts; relational contracts; implicit contracts; market interaction; experimental economics; repeated transaction; social preferences; reputation; firm latitude; finitely-repeated games;

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References

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Cited by:
  1. Ana I. Balsa & Michael T. French & Tracy L. Regan, 2012. "Relative Deprivation and Risky Behaviors," Documentos de Trabajo/Working Papers 1203, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
  2. Brown, M. & Serra Garcia, M., 2010. "Relational Contracting Under the Threat of Expropriation – Experimental Evidence," Discussion Paper 2010-85, Tilburg University, Center for Economic Research.
  3. Brown, Martin & Falk, Armin & Fehr, Ernst, 2008. "Competition and Relational Contracts: The Role of Unemployment as a Disciplinary Device," IZA Discussion Papers 3345, Institute for the Study of Labor (IZA).
  4. Cordero Salas, Paula, 2013. "Cooperation and reciprocity in carbon sequestration contracts," Policy Research Working Paper Series 6521, The World Bank.
  5. Brown, Martin & Serra-García, Marta, . "The Threat of Exclusion and Relational Contracting," Working Papers on Finance 1407, University of St. Gallen, School of Finance.
  6. Brown, Martin & Serra-Garcia, Marta, 2011. "The Threat of Exclusion and Relational Contracting," Discussion Papers in Economics 12287, University of Munich, Department of Economics.

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