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Repeated partnerships with multiple equilibria and imperfect monitoring: An experimental study

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  • Kloosterman, Andrew

Abstract

I investigate finitely repeated partnership games with imperfect monitoring where both mutual effort and mutual shirking are Nash equilibria of the stage game. The treatment variable is the number of repetitions. I find that period 1 effort rates are increasing in the number of repetitions, but subjects use trigger strategies that switch to permanent shirking after enough failed projects so effort rates decrease across time in all treatments. Additionally, the rate of decrease is less when there are more repetitions. Total effort does not vary much across the treatments, because the increased period 1 effort when the number of repetitions is large is mostly canceled out by the erosion of effort as the game progresses.

Suggested Citation

  • Kloosterman, Andrew, 2020. "Repeated partnerships with multiple equilibria and imperfect monitoring: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 172(C), pages 1-16.
    • Handle: RePEc:eee:jeborg:v:172:y:2020:i:c:p:1-16
    DOI: 10.1016/j.jebo.2020.01.029
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    References listed on IDEAS

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    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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