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Cooperation and Trustworthiness in Repeated Interaction

Listed author(s):
  • Glogowsky, Ulrich
  • Cagala, Tobias
  • Rincke, Johannes
  • Grimm, Veronika

Public goods provision often involves groups of contributors repeatedly interacting with administrators who can extract rents from the pool of contributions. We suggest a novel identification approach that exploits the sequential ordering of decisions in a panel vector autoregressive model to study social interactions in the laboratory. Despite rent extraction, contributors and administrators establish a stable interaction with cooperation matching the level from a comparable Public Goods Game. In the short run, temporary changes in behavior trigger substantial behavioral multiplier effects. We demonstrate that cooperation breeds trustworthiness and vice versa and that one-time disruptions are particularly damaging in settings with a lack of cooperative attitudes and trust.

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Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2014 (Hamburg): Evidence-based Economic Policy with number 100437.

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Date of creation: 2014
Handle: RePEc:zbw:vfsc14:100437
Contact details of provider: Web page: http://www.socialpolitik.org/
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