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Which Way to Cooperate

  • Todd R. Kaplan
  • Bradley J. Ruffle

We introduce a two-player, binary-choice game in which both players have a privately known incentive to enter, yet the combined surplus is highest if only one enters. Repetition of this game admits two distinct ways to cooperate: turn taking and cutoffs, which rely on the player's private value to entry. A series of experiments highlights the role of private information in determining which mode players adopt. If an individual's entry values vary little (e.g., mundane tasks), taking turns is likely; if these potential values are diverse (e.g., difficult tasks that differentiate individuals by skill or preferences), cutoff cooperation emerges.

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File URL: http://hdl.handle.net/10.1111/j.1468-0297.2011.02485.x
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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 122 (2012)
Issue (Month): 563 (09)
Pages: 1042-1068

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Handle: RePEc:ecj:econjl:v:122:y:2012:i:563:p:1042-1068
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