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Alternating or compensating? An experiment on the repeated sequential best shot game

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  • Lisa Bruttel
  • Werner G�th

Abstract

In the two-person sequential best shot game, first player 1 contributes to a public good and then player 2 is informed about this choice before contributing. The payoff from the public good is the same for both players and depends only on the maximal contribution. Efficient voluntary cooperation in the repeated best shot game therefore requires that only one player should contribute in a given round. To provide better chances for such cooperation, we enrich the sequential best shot base game by a third stage allowing the party with the lower contribution to transfer some of its periodic gain to the other party. Participants easily establish cooperation in the finitely repeated game. When cooperation evolves, it mostly takes the form of ''labor division'', with one participant constantly contributing and the other constantly compensating. However, in a treatment in which compensation is not possible, (more or less symmetric) alternating occurs frequently and turns out to be almost as efficient as labor division.

Suggested Citation

  • Lisa Bruttel & Werner G�th, 2013. "Alternating or compensating? An experiment on the repeated sequential best shot game," TWI Research Paper Series 86, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    • Handle: RePEc:twi:respas:0086
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    References listed on IDEAS

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    Cited by:

    1. Tjaša Bjedov & Thierry Madiès & Marie Claire Villeval, 2016. "Communication And Coordination In A Two-Stage Game," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1519-1540, July.

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    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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