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Expectations of reciprocity when competitors share information: Experimental evidence

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  • Ganglmair, Bernhard
  • Holcomb, Alex
  • Myung, Noah

Abstract

Informal exchange of information among competitors has been well-documented in a variety of industries. We use an indeterminate horizon centipede game to establish an information feedback loop in the laboratory and show that an individual’s beliefs about the recipient’s intentions to reciprocate matter more than a recipient’s ability to do so. This implies that reducing strategic uncertainty about a competitor’s behavior has a stronger effect on information flows than reducing environmental uncertainty (about the competitor’s ability). We further show how a players’ experience within, and across, episodes of information exchange drives beliefs about competitors’ behavior. We conclude by discussing managerial implications.

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  • Ganglmair, Bernhard & Holcomb, Alex & Myung, Noah, 2020. "Expectations of reciprocity when competitors share information: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 170(C), pages 244-267.
  • Handle: RePEc:eee:jeborg:v:170:y:2020:i:c:p:244-267
    DOI: 10.1016/j.jebo.2019.12.006
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    More about this item

    Keywords

    Knowledge diffusion; Information sharing; Reciprocity; Experimental economics; Centipede game;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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