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Cooperation as self-interested reciprocity in the Centipede

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  • Farina, Francesco
  • Sbriglia, Patrizia

Abstract

Cooperation is a pervasive social phenomenon but more often than not economic theories have little to say about its causes and consequences. In this paper, we explore the hypothesis that cooperative behaviour might be motivated by purely selfish interest when the “social” payoff in a game is increasing. We report the results of a series of experiments on the centipede game. The experiments are organized in two subsequent steps. Subjects first participate in a 2-period trust game, randomly matched with unknown partners. We apply the strategy method in order to elicit their social preferences. On the basis of their pre-game behaviour, individuals are divided into three main social groups: selfish individuals, pure altruists and reciprocators. At the second step of the experiment, subjects play a repeated 6-move centipede game with increasing final payoff. Each subject plays twice in a low stake and in a high centipede game, and he/she is informed about his/her co-player social preferences. We identify the origin of cooperation within homogeneous and heterogeneous social groups.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3701.

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Date of creation: Feb 2007
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Handle: RePEc:pra:mprapa:3701

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Keywords: social preferences; altruisms; experiments;

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  1. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
  2. Abigail Barr & Magnus Lindelow, 2005. "Strategy Choice and Cognitive Ability in Field Experiments," Economics Series Working Papers GPRG-WPS-034, University of Oxford, Department of Economics.
  3. Simon Gächter & Christian Thöni, 2004. "Social learning and voluntary cooperation among like-minded people," University of St. Gallen Department of Economics working paper series 2004 2004-12, Department of Economics, University of St. Gallen.
  4. Giovanni Ponti, 1996. "Cycles of Learning in the Centipede Game," Discussion Papers 96-22 ISSN 1350-6722, University College London, Department of Economics.
  5. Alberto Alesina & Eliana La Ferrara, 2004. "Ethnic Diversity and Economic Performance," Development Working Papers 193, Centro Studi Luca d\'Agliano, University of Milano.
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  8. Guth, Werner & Huck, Steffen & Muller, Wieland, 2001. "The Relevance of Equal Splits in Ultimatum Games," Games and Economic Behavior, Elsevier, vol. 37(1), pages 161-169, October.
  9. Urs Fischbacher & Simon Gaechter & Ernst Fehr, . "Are People Conditionally Cooperative? Evidence from a Public Goods Experiment," IEW - Working Papers 016, Institute for Empirical Research in Economics - University of Zurich.
  10. McKelvey, Richard D & Palfrey, Thomas R, 1992. "An Experimental Study of the Centipede Game," Econometrica, Econometric Society, vol. 60(4), pages 803-36, July.
  11. Fey, Mark & McKelvey, Richard D & Palfrey, Thomas R, 1996. "An Experimental Study of Constant-Sum Centipede Games," International Journal of Game Theory, Springer, vol. 25(3), pages 269-87.
  12. Binmore, Ken, 1988. "Modeling Rational Players: Part II," Economics and Philosophy, Cambridge University Press, vol. 4(01), pages 9-55, April.
  13. Aumann, Robert J., 1996. "Reply to Binmore," Games and Economic Behavior, Elsevier, vol. 17(1), pages 138-146, November.
  14. Alesina, Alberto & La Ferrara, Eliana, 2005. "Ethnic Diversity and Economic Performance," Scholarly Articles 4553005, Harvard University Department of Economics.
  15. David K. Levine, 1998. "Modeling Altruism and Spitefulness in Experiment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(3), pages 593-622, July.
  16. Aumann, Robert J., 1998. "On the Centipede Game," Games and Economic Behavior, Elsevier, vol. 23(1), pages 97-105, April.
  17. Aumann, Robert J., 1995. "Backward induction and common knowledge of rationality," Games and Economic Behavior, Elsevier, vol. 8(1), pages 6-19.
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