It's My Turn ... Please, After You: An Experimental Study of Cooperation and Social Conventions
AbstractWe introduce a class of two-player cooperation games where each player faces a binary decision, enter or exit. These games have a unique Nash equilibrium of entry. However, entry imposes a large enough negative externality on the other player such that the unique social optimum involves the player with the higher value to entry entering and the other player exiting. When the game is repeated and players' values to entry are private, cooperation admits the form of either taking turns entering or using a cutoff strategy and entering only for high private values of entry. Even with conditions that provide opportunities for unnoticed or non-punishable 'cheating', our empirical analysis including a simple strategy inference technique reveals that the Nash-equilibrium strategy is never the modal choice. In fact, most subjects employ the socially optimal symmetric cutoff strategy. These games capture the nature of cooperation in many economic and social situations such as bidding rings in auctions, competition for market share, labor supply decisions in the face of excess supply, queuing in line and courtship.
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Bibliographic InfoPaper provided by EconWPA in its series Experimental with number 0410001.
Length: 37 pages
Date of creation: 06 Oct 2004
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cooperation; incomplete information; random payoffs; strategy inference; experimental economics.;
Other versions of this item:
- Todd R. Kaplan & Bradley J. Ruffle, 2004. "It's My Turn . . . Please, After You: An Experimental Study of Cooperation and Social Conventions," Discussion Papers 0403, Exeter University, Department of Economics.
- C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-10-21 (All new papers)
- NEP-CBE-2004-10-13 (Cognitive & Behavioural Economics)
- NEP-EXP-2004-10-21 (Experimental Economics)
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