Trust and Reciprocity in 2-node and 3-node Networks
AbstractIn this paper we focus on the interaction between exogenous network structure and bargaining behavior in a laboratory experiment. Our main question is how competition and cooperation interact in bargaining environments based on networked versions of the investment game. We focus on 3-node networked markets and vary the network structure to model competition upstream (multiple sellers paired with a monopsonistic buyer) and competition downstream (a monopolistic seller paired with multiple buyers). We describe two kinds of models of trust for such networked environments, absolute and relativized models, and use this structure to generate a general hypothesis about these environments: that information crowds in cooperation on the competitive side of the market. The experimental results support this hypothesis.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 7005.
Date of creation: 26 Jan 2008
Date of revision:
networks; trust; reciprocity; experiments; investment game;
Find related papers by JEL classification:
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- D00 - Microeconomics - - General - - - General
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-02-09 (All new papers)
- NEP-CBE-2008-02-09 (Cognitive & Behavioural Economics)
- NEP-COM-2008-02-09 (Industrial Competition)
- NEP-EXP-2008-02-09 (Experimental Economics)
- NEP-GTH-2008-02-09 (Game Theory)
- NEP-ICT-2008-02-09 (Information & Communication Technologies)
- NEP-MIC-2008-02-09 (Microeconomics)
- NEP-NET-2008-02-09 (Network Economics)
- NEP-SOC-2008-02-09 (Social Norms & Social Capital)
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- Di Cagno, Daniela & Sciubba, Emanuela, 2010. "Trust, trustworthiness and social networks: Playing a trust game when networks are formed in the lab," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 75(2), pages 156-167, August.
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