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It Pays to be Nice: The Benefits of Cooperating in Markets

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This paper contributes to the experimental literature by examining the causal effect of partnerchoice opportunities on the earnings of different cooperative types. We first elicit cooperative types and then randomly assign subjects to a repeated prisoner’s dilemma game with either mutual partner choice or random matching. In each round, the individual who fails to attain a partner is excluded from the group. This design allows us to study the causal effect of partner choice on earnings and exclusion. The results from two experiments show that partner choice allows cooperators to outperform free riders, cooperators earn more than free riders, and cooperators are less frequently excluded.

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  • Serdarevic, Nina & Strømland, Eirik & Tjøtta, Sigve, 2018. "It Pays to be Nice: The Benefits of Cooperating in Markets," Working Papers in Economics 12/18, University of Bergen, Department of Economics.
  • Handle: RePEc:hhs:bergec:2018_012
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    More about this item

    Keywords

    cooperation; commitment; partner choice; punishment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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