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Cooperating over losses and competing over gains: a social dilemma experiment

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  • Ispano, Alessandro
  • Schwardmann, Peter

Abstract

Evidence from studies in international relations, the politics of reform, collective action and price competition suggests that economic agents in social dilemma situations cooperate more to avoid losses than in the pursuit of gains. To test whether the prospect of losses can induce cooperation, we let experimental subjects play the traveler’s dilemma in the gain and loss domain. Subjects cooperate substantially more over losses. Our experimental design allows us to show that this treatment effect is best explained by reference-dependent risk preferences and referencedependent strategic sophistication. We discuss policy implications and relate our findings to other experimental games played in the loss domain.

Suggested Citation

  • Ispano, Alessandro & Schwardmann, Peter, 2016. "Cooperating over losses and competing over gains: a social dilemma experiment," Discussion Papers in Economics 27576, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenec:27576
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    Cited by:

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    3. Qingzhou Sun & Haozhi Guo & Jiarui Wang & Jing Zhang & Chengming Jiang & Yongfang Liu, 2021. "Differences in cooperation between social dilemmas of gain and loss," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 16(6), pages 1506-1524, November.
    4. repec:cup:judgdm:v:16:y:2021:i:6:p:1506-1524 is not listed on IDEAS

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    More about this item

    Keywords

    cooperation; traveler’s dilemma; social dilemma; loss domain; diminishing sensitivity; cognitive hierarchy;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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