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Cooperation among strangers: an experiment with indefinite interaction

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Author Info
Gabriele Camera
Marco Casari

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Abstract

We study the emergence of norms of cooperation in experimental economies populated by strangers interacting indefinitely and lacking formal enforcement institutions. In all treatments the efficient outcome is sustainable as an equilibrium. We address the following questions: can these economies achieve full efficiency? Which institutions for monitoring and enforcement promote cooperation? Finally, what classes of strategies are employed to achieve high efficiency? We find that, first, cooperation can be sustained even in anonymous settings; second, some type of monitoring and punishment institutions significantly promote cooperation; and, third, subjects dislike indiscriminate strategies and prefer selective strategies.

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Paper provided by Purdue University, Department of Economics in its series Purdue University Economics Working Papers with number 1201.

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Length: 47 pages
Date of creation: Jun 2007
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Handle: RePEc:pur:prukra:1201

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Related research
Keywords: experiments repeated games cooperation equilibrium selection prisoners’ dilemma random matching

Find related papers by JEL classification:
C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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    Other versions:
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  15. Paul J. Healy, 2007. "Group Reputations, Stereotypes, and Cooperation in a Repeated Labor Market," American Economic Review, American Economic Association, vol. 97(5), pages 1751-1773, December.
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