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Do the Selfish Mimic Cooperators? Experimental Evidence from Finitely-Repeated Labor Markets

  • Roe, Brian E.

    ()

    (Ohio State University)

  • Wu, Steven Y.

    ()

    (Purdue University)

Experimental studies have consistently shown that cooperative outcomes can emerge even in finitely repeated games. Such outcomes are justified by existing reputation building models, which suggest that cooperative outcomes can be sustained if some subjects have other-regarding preferences. While the existence of other-regarding preferences is typically used to justify experimental outcomes, we are unaware of empirical studies that explicitly examine the interaction between cooperators (those with other-regarding preferences) and selfish subjects in sustaining cooperation. In this paper, we classify subjects as either selfish or cooperative using simple social preference games and then test for behavioral differences between the two types in a finitely-repeated labor market with unenforceable worker effort. Theory predicts, and our data confirms, that (1) selfish players mimic the actions of cooperators when trading partners can track the individual reputation of past partners and (2) selfish and cooperative types act differently when individual reputations cannot be tracked.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4084.

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Length: 37 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4084
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