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Competition and cooperation in markets. The experimental case of a winner-take-all setting

  • Ottone, Stefania
  • Ponzano, Ferruccio

The aim of this experiment is twofold. First of all, we want to investigate whether a winner-take-all scenario where subjects with homogeneous skills meet more than once stimulates subjects' cooperation. Secondly, we want to compare agents' tendency to cooperate in settings with different levels of competition. We ran three treatments. The first one reproduces the classical public good game. The second environment represents a perfect competition market, while in the third treatment we consider a winner-take-all market. The most relevant result we obtain is that while perfect competition forces players to be efficient and to behave as they were self-interested, a winner-take-all market induces strategic cooperation.

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Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 39 (2010)
Issue (Month): 2 (April)
Pages: 163-170

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Handle: RePEc:eee:soceco:v:39:y:2010:i:2:p:163-170
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  1. Urs Fischbacher & Christian Thöni, . "Excess Entry in an Experimental Winner-Take-All Market," IEW - Working Papers 086, Institute for Empirical Research in Economics - University of Zurich.
  2. J. Ledyard, 1997. "Public Goods: A Survey of Experimental Research," Levine's Working Paper Archive 509, David K. Levine.
  3. Friedman, J W, 1969. "On Experimental Research in Oligopoly," Review of Economic Studies, Wiley Blackwell, vol. 36(108), pages 399-415, October.
  4. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
  5. Nicholas Bardsley & Peter Moffatt, 2007. "The Experimetrics of Public Goods: Inferring Motivations from Contributions," Theory and Decision, Springer, vol. 62(2), pages 161-193, March.
  6. Vernon L. Smith, 1962. "An Experimental Study of Competitive Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 70, pages 322.
  7. Christoph Engel, 2006. "How Much Collusion. A Meta-Analysis On Oligopoly Experiments," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2006_27, Max Planck Institute for Research on Collective Goods.
  8. Ananish Chaudhuri & Sara Graziano & Pushkar Maitra, 2006. "Social Learning and Norms in a Public Goods Experiment with Inter-Generational Advice -super-1," Review of Economic Studies, Oxford University Press, vol. 73(2), pages 357-380.
  9. Shlomi Dinar, 2009. "Scarcity and Cooperation Along International Rivers," Global Environmental Politics, MIT Press, vol. 9(1), pages 109-135, February.
  10. Matthias Kräkel & Petra Nieken & Judith Przemeck, 2008. "Risk Taking in Winner-Take-All Competition," Bonn Econ Discussion Papers bgse7_2008, University of Bonn, Germany.
  11. Ernst Fehr & Klaus Schmidt, 2000. "Theories of Fairness and Reciprocity – Evidence and Economic Applications," CESifo Working Paper Series 403, CESifo Group Munich.
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  13. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  14. Chen, Zhijun, 2006. "Fighting Collusion in Tournaments," MPRA Paper 872, University Library of Munich, Germany.
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