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Constructing Social Division to Support Cooperation

Author

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  • Choy, James P.

    (University of Warwick)

Abstract

Many societies are divided into multiple smaller groups. Certain kinds of interaction are more likely to take place within a group than across groups. I model a reputation effect that enforces these divisions. Agents who interact with members of different groups can support lower levels of cooperation with members of their own groups. A hierarchical relationship between groups appears endogenously in equilibrium. Group divisions appear without any external cause, and improvements in formal contracting institutions may cause group divisions to disappear. Qualitative evidence from the anthropological literature is consistent with several predictions of the model.

Suggested Citation

  • Choy, James P., 2016. "Constructing Social Division to Support Cooperation," CAGE Online Working Paper Series 266, Competitive Advantage in the Global Economy (CAGE).
  • Handle: RePEc:cge:wacage:266
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    File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/266-2016_choy.pdf
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    References listed on IDEAS

    as
    1. Maurizio Mazzocco & Shiv Saini, 2012. "Testing Efficient Risk Sharing with Heterogeneous Risk Preferences," American Economic Review, American Economic Association, vol. 102(1), pages 428-468, February.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cooperation; Caste; Social Institution JEL Classification: C73; O12; O17;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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