On the economic value of repeated interactions under adverse selection
The paper studies, in a repeated interaction setting, how the presence of cooperative agents in a heterogeneous community organized in groups, affects group efficiency and stability. The paper extends the literature by assuming that each type can profitably mimic other types. It is shown that such enlargement of profitable options prevents group stabilization in the single group case. Stabilization can be obtained with many groups, but its driver is not the efficiency gain due to the presence of cooperative individuals. Instead stabilization is the result of free riding opportunities.
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| Length: | 29 pages |
| Date of creation: | Oct 2005 |
| Handle: | RePEc:pad:wpaper:0007 |
| Contact details of provider: | Postal: via del Santo, 33 - 35122 Padova Phone: +39 +49 8274210 Fax: +39 +49 827.4211 Web page: http://www.decon.unipd.it/ More information through EDIRC
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References listed on IDEAS
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- Sen, Amartya, 1985. "Goals, Commitment, and Identity," Journal of Law, Economics and Organization, Oxford University Press, vol. 1(2), pages 341-355, Fall.
- Rauch, James E. & Watson, Joel, 2003.
"Starting small in an unfamiliar environment,"
International Journal of Industrial Organization,
Elsevier, vol. 21(7), pages 1021-1042, September.
- James E. Rauch & Joel Watson, 1999. "Starting Small in an Unfamiliar Environment," Cowles Foundation Discussion Papers 1218, Cowles Foundation for Research in Economics, Yale University.
- Rauch, J E & Watson, Joel, 1999. "Starting Small in an Unfamiliar Environment," University of California at San Diego, Economics Working Paper Series qt4rp145hc, Department of Economics, UC San Diego.
- James E. Rauch & Joel Watson, 1999. "Starting Small in an Unfamiliar Environment," NBER Working Papers 7053, National Bureau of Economic Research, Inc.
- Parikshit Ghosh & Debraj Ray, 1996. "Cooperation in Community Interaction Without Information Flows," Review of Economic Studies, Oxford University Press, vol. 63(3), pages 491-519.
- Parikshit Ghosh & Debraj Ray, 1995. "Cooperation in Community Interaction Without Information Flows," Boston University - Institute for Economic Development 64, Boston University, Institute for Economic Development.
- Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, vol. 27(2), pages 280-312, August.
- Paul Milgrom & John Roberts, 1980. "Predation, Reputation, and Entry Deterrence," Discussion Papers 427, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Paul Milgrom & John Roberts, 1997. "Predation, reputation , and entry deterrence," Levine's Working Paper Archive 1460, David K. Levine.
- Kranton, Rachel E, 1996. "The Formation of Cooperative Relationships," Journal of Law, Economics and Organization, Oxford University Press, vol. 12(1), pages 214-233, April. Full references (including those not matched with items on IDEAS)
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