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Cooperation among strangers with and without a monetary system

Author

Listed:
  • Maria Bigoni

    (University of Bologna & IZA)

  • Gabriele Camera

    (Chapman University & University of Bologna)

  • Marco Casari

    (University of Bologna & IZA)

Abstract

Human societies prosper when their members move beyond local exchange and cooperate with outsiders in the creation of wealth. Collaboration of this type presents formidable challenges because interaction is impersonal, reciprocity is unfeasible and trust cannot be easily established. Here we study this cooperation problem by modeling strategic interaction among strangers through an Intertemporal Exchange Game. The setup can be easily implemented in the laboratory to study a variety of cooperation-enhancing institutions. In particular, we study the role of a fiat monetary system by introducing intrinsically worthless tokens that can be offered in exchange for cooperation. The experiments show that a monetary system spontaneously emerges in the laboratory, and is a key institution to promote cooperation among strangers.

Suggested Citation

  • Maria Bigoni & Gabriele Camera & Marco Casari, 2019. "Cooperation among strangers with and without a monetary system," Working Papers 19-01, Chapman University, Economic Science Institute.
    • Handle: RePEc:chu:wpaper:19-01
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    File URL: https://digitalcommons.chapman.edu/esi_working_papers/256/
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    More about this item

    Keywords

    gift-giving; intertemporal trade; macroeconomic experiments; repeated games; social norms;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy

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