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Long-term commitment and cooperation

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  • Frédéric Schneider
  • Roberto A. Weber

Abstract

We study how the willingness to enter long-term bilateral relationships affects cooperation even when parties have little information about each other, ex ante, and cooperation is otherwise unenforceable. We experimentally investigate a finitely-repeated Prisoner’s Dilemma, allowing players to endogenously select interaction durations. Consistent with prior research, longer interactions facilitate cooperation. However, many individuals avoid long-term commitment, with uncooperative types less likely to commit than conditional cooperators. Endogenously chosen long-term commitment yields higher cooperation rates (98% in one condition) than exogenously imposed commitment. Thus, the willingness to enter into long-term relationships provides a means for fostering - and screening for - efficient cooperation.

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Paper provided by Department of Economics - University of Zurich in its series ECON - Working Papers with number 130.

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Date of creation: Sep 2013
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Handle: RePEc:zur:econwp:130

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Keywords: Repeated games; cooperation; voluntary commitment;

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