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Cooperation as self-interested reciprocity in the Centipede

  • Farina, Francesco
  • Sbriglia, Patrizia

Cooperation is a pervasive social phenomenon but more often than not economic theories have little to say about its causes and consequences. In this paper, we explore the hypothesis that cooperative behaviour might be motivated by purely selfish interest when the “social” payoff in a game is increasing. We report the results of a series of experiments on the centipede game. The experiments are organized in two subsequent steps. Subjects first participate in a 2-period trust game, randomly matched with unknown partners. We apply the strategy method in order to elicit their social preferences. On the basis of their pre-game behaviour, individuals are divided into three main social groups: selfish individuals, pure altruists and reciprocators. At the second step of the experiment, subjects play a repeated 6-move centipede game with increasing final payoff. Each subject plays twice in a low stake and in a high centipede game, and he/she is informed about his/her co-player social preferences. We identify the origin of cooperation within homogeneous and heterogeneous social groups.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3701.

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Date of creation: Feb 2007
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Handle: RePEc:pra:mprapa:3701
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  1. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
  2. Ponti, Giovanni, 2000. "Cycles of Learning in the Centipede Game," Games and Economic Behavior, Elsevier, vol. 30(1), pages 115-141, January.
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  6. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
  7. Urs Fischbacher & Simon Gaechter & Ernst Fehr, . "Are People Conditionally Cooperative? Evidence from a Public Goods Experiment," IEW - Working Papers 016, Institute for Empirical Research in Economics - University of Zurich.
  8. Aumann, Robert J., 1995. "Backward induction and common knowledge of rationality," Games and Economic Behavior, Elsevier, vol. 8(1), pages 6-19.
  9. Alesina, Alberto & La Ferrara, Eliana, 2005. "Ethnic Diversity and Economic Performance," Scholarly Articles 4553005, Harvard University Department of Economics.
  10. Aumann, Robert J., 1998. "On the Centipede Game," Games and Economic Behavior, Elsevier, vol. 23(1), pages 97-105, April.
  11. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
  12. Guth, Werner & Huck, Steffen & Muller, Wieland, 2001. "The Relevance of Equal Splits in Ultimatum Games," Games and Economic Behavior, Elsevier, vol. 37(1), pages 161-169, October.
  13. David K Levine, 1997. "Modeling Altruism and Spitefulness in Experiments," Levine's Working Paper Archive 2047, David K. Levine.
  14. Simon Gächter & Christian Thöni, 2005. "Social Learning and Voluntary Cooperation Among Like-Minded People," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 303-314, 04/05.
  15. Aumann, Robert J., 1996. "Reply to Binmore," Games and Economic Behavior, Elsevier, vol. 17(1), pages 138-146, November.
  16. Abigail Barr & Magnus Lindelow, 2005. "Strategy Choice and Cognitive Ability in Field Experiments," Economics Series Working Papers GPRG-WPS-034, University of Oxford, Department of Economics.
  17. McKelvey, Richard D & Palfrey, Thomas R, 1992. "An Experimental Study of the Centipede Game," Econometrica, Econometric Society, vol. 60(4), pages 803-36, July.
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