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 group efficiency and stability. The paper extends the 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. Instead stabilization is the result of free riding opportunities.
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Bibliographic InfoPaper provided by Dipartimento di Scienze Economiche "Marco Fanno" in its series "Marco Fanno" Working Papers with number 0007.
Length: 29 pages
Date of creation: Oct 2005
Date of revision:
Other versions of this item:
- Lorenzo Rocco & Ottorino Chillem, 2006. "On The Economic Value of Repeated Interactions Under Adverse Selection," Working Papers 2006.73, Fondazione Eni Enrico Mattei.
- 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-2005-11-12 (All new papers)
- NEP-EVO-2005-11-12 (Evolutionary Economics)
- NEP-MIC-2005-11-12 (Microeconomics)
- NEP-SOC-2005-11-12 (Social Norms & Social Capital)
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