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It's My Turn ... Please, After You: An Experimental Study of Cooperation and Social Conventions

Author

Listed:
  • Todd Kaplan

    (University of Exeter)

  • Bradley Ruffle

    (Ben- Gurion University)

Abstract

We introduce a class of two-player cooperation games where each player faces a binary decision, enter or exit. These games have a unique Nash equilibrium of entry. However, entry imposes a large enough negative externality on the other player such that the unique social optimum involves the player with the higher value to entry entering and the other player exiting. When the game is repeated and players' values to entry are private, cooperation admits the form of either taking turns entering or using a cutoff strategy and entering only for high private values of entry. Even with conditions that provide opportunities for unnoticed or non-punishable 'cheating', our empirical analysis including a simple strategy inference technique reveals that the Nash-equilibrium strategy is never the modal choice. In fact, most subjects employ the socially optimal symmetric cutoff strategy. These games capture the nature of cooperation in many economic and social situations such as bidding rings in auctions, competition for market share, labor supply decisions in the face of excess supply, queuing in line and courtship.

Suggested Citation

  • Todd Kaplan & Bradley Ruffle, 2004. "It's My Turn ... Please, After You: An Experimental Study of Cooperation and Social Conventions," Experimental 0410001, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpex:0410001
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    cooperation; incomplete information; random payoffs; strategy inference; experimental economics.;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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