The One who Gives Too Early, Gives Twice: Cooperation, Blood Feuds and Third-Party Institutions
Third-party institutions (judges, real-estate agents, referees, mediators, and arbiters) are designed to avoid mis-coordination among potential cooperators. They differ from first-party institutions (lobbyists) who act as rent-seekers in bargaining. They also differ from second-party institutions (auditors) who act as monitors in principal-agency problems. Third-party institutions are geared to minimize distorted belief formation, which arises from the uncertainty of how to judge the over-contribution of others: Is it the outcome of a positive income shock or is it expressive of real income being higher than estimated income? Given positively skewed income distribution and bounded rationality, such uncertainty leads to mis-judgments of the contribution of others as “unfair,” leading to the collapse of cooperation.
|Date of creation:||Sep 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, Monash University, Victoria 3800, Australia|
Web page: http://www.buseco.monash.edu.au/eco/
More information through EDIRC
|Order Information:|| Web: http://www.buseco.monash.edu.au/eco/research/papers/ Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ambrus, Attila & Pathak, Parag A., 2011.
"Cooperation over finite horizons: A theory and experiments,"
Journal of Public Economics,
Elsevier, vol. 95(7-8), pages 500-512, August.
- Ambrus, Attila & Pathak, Parag A., 2011. "Cooperation over finite horizons: A theory and experiments," Journal of Public Economics, Elsevier, vol. 95(7), pages 500-512.
- Miller, John H. & Andreoni, James, 1991. "Can evolutionary dynamics explain free riding in experiments?," Economics Letters, Elsevier, vol. 36(1), pages 9-15, May.
- Anabela Botelho & Glenn W. Harrison & Lígia Costa Pinto & Elisabet E. Rutstrom, 2005.
"Testing static game theory with dynamic experiments: a case study of public goods,"
NIMA Working Papers
29, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
- Botelho, Anabela & Harrison, Glenn W. & Pinto, Lígia M. Costa & Rutström, Elisabet E., 2009. "Testing static game theory with dynamic experiments: A case study of public goods," Games and Economic Behavior, Elsevier, vol. 67(1), pages 253-265.e3, September.
- Kreps, David M. & Wilson, Robert, 1982.
"Reputation and imperfect information,"
Journal of Economic Theory,
Elsevier, vol. 27(2), pages 253-279, August.
- H. Peyton Young, 1996. "The Economics of Convention," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 105-122, Spring.
- Khalil, Elias L, 1997. "Is the Firm an Individual?," Cambridge Journal of Economics, Oxford University Press, vol. 21(4), pages 519-44, July.
When requesting a correction, please mention this item's handle: RePEc:mos:moswps:2012-24. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Simon Angus)
If references are entirely missing, you can add them using this form.