Advanced Search
MyIDEAS: Login to save this paper or follow this series

Cooperation and Self-Governance in Heterogeneous Communities

Contents:

Author Info

  • Juan Escobar

    ()
    (Department of Economics, Stanford University)

Abstract

This paper theoretically studies the consequences of heterogeneity on self-governance, cooperation, and trust in large communities. I consider a game model where players belong to a large population and are randomly matched. Players interact with each other infrequently and, when matched, play a prisoners’ dilemma. There exists an institution that can convey information on play histories. Players’ payoff functions differ, so that some players have a higher tendency towards cooperation. This constitutes the main modeling innovation of this work and makes the model a mixed adverse selection-moral hazard model. A suitable equilibrium concept is introduced and characterized. Some novel comparative statics results are obtained, showing, in sharp contrast with previous papers, that more heterogeneous societies may sustain more cooperation. Private enforcement mechanisms are explored, showing conditions under which private for profit intermediation leads to Pareto optimal cooperation. We discuss the implications of my results for applied work and show how the disclosure of credit histories impacts the defection rates of credit relations.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www-siepr.stanford.edu/repec/sip/07-038.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 07-038.

as in new window
Length:
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:sip:dpaper:07-038

Contact details of provider:
Postal: 366 Galvez Street, Stanford, California 94305-6015
Phone: (650) 725-1874
Fax: (650) 723-8611
Web page: http://siepr.stanford.edu
More information through EDIRC

Related research

Keywords: Large communities; cooperation; heterogeneity; social capital; trust; reputation;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Jonathan Levin, 2001. "Information and the Market for Lemons," Working Papers 01004, Stanford University, Department of Economics.
  2. DANIEL B. KLElN, 1992. "Promise Keeping In The Great Society: A Model Of Credit Information Sharing," Economics and Politics, Wiley Blackwell, vol. 4(2), pages 117-136, 07.
  3. Szeidl, Adam & Rosenblat, Tanya & Mobius, Markus & Karlan, Dean, 2009. "Trust and Social Collateral," Scholarly Articles 3051620, Harvard University Department of Economics.
  4. Ghosh, Parikshit & Ray, Debraj, 1996. "Cooperation in Community Interaction without Information Flows," Review of Economic Studies, Wiley Blackwell, vol. 63(3), pages 491-519, July.
  5. Kandori, Michihiro, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Wiley Blackwell, vol. 59(1), pages 63-80, January.
  6. Haag, Matthew & Roger Lagunoff, 2003. "On the Size and Structure of Group Cooperation," Royal Economic Society Annual Conference 2003 97, Royal Economic Society.
  7. Jappelli, Tullio & Pagano, Marco, 1991. "Information Sharing in Credit Markets," CEPR Discussion Papers 579, C.E.P.R. Discussion Papers.
  8. Robert M. Hunt, 2002. "What's in the file? The economics and law of consumer credit bureaus," Business Review, Federal Reserve Bank of Philadelphia, issue Q2, pages 17-25.
  9. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
  10. Alessandro Lizzeri, 1999. "Information Revelation and Certification Intermediaries," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 214-231, Summer.
  11. Echenique, Federico & Sabarwal, Tarun, 2003. "Strong comparative statics of equilibria," Games and Economic Behavior, Elsevier, vol. 42(2), pages 307-314, February.
  12. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June.
  13. Okuno-Fujiwara Masahiro & Postlewaite Andrew, 1995. "Social Norms and Random Matching Games," Games and Economic Behavior, Elsevier, vol. 9(1), pages 79-109, April.
  14. Steven Tadelis, 2002. "The Market for Reputations as an Incentive Mechanism," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 854-882, August.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:sip:dpaper:07-038. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne Shor).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.