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Long-term commitment and cooperation


Schneider, Frédéric; Weber, Roberto A (2013). Long-term commitment and cooperation. Working paper series / Department of Economics 130, University of Zurich.

Abstract

We study how the willingness to enter long-term bilateral relationships affects cooperation even when parties have little information about each other, ex ante, and cooperation is otherwise unenforceable. We experimentally investigate a finitely-repeated Prisoner’s Dilemma, allowing players to endogenously select interaction durations. Consistent with prior research, longer interactions facilitate cooperation. However, many individuals avoid long-term commitment, with uncooperative types less likely to commit than conditional cooperators. Endogenously chosen long-term commitment yields higher cooperation rates (98% in one condition) than exogenously imposed commitment. Thus, the willingness to enter into long-term relationships provides a means for fostering - and screening for - efficient cooperation.

Abstract

We study how the willingness to enter long-term bilateral relationships affects cooperation even when parties have little information about each other, ex ante, and cooperation is otherwise unenforceable. We experimentally investigate a finitely-repeated Prisoner’s Dilemma, allowing players to endogenously select interaction durations. Consistent with prior research, longer interactions facilitate cooperation. However, many individuals avoid long-term commitment, with uncooperative types less likely to commit than conditional cooperators. Endogenously chosen long-term commitment yields higher cooperation rates (98% in one condition) than exogenously imposed commitment. Thus, the willingness to enter into long-term relationships provides a means for fostering - and screening for - efficient cooperation.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C72, C92, D03
Uncontrolled Keywords:Repeated games, cooperation, voluntary commitment
Language:English
Date:September 2013
Deposited On:01 Oct 2013 13:26
Last Modified:07 Dec 2017 22:42
Series Name:Working paper series / Department of Economics
Number of Pages:50
ISSN:1664-7041
Official URL:http://www.econ.uzh.ch/static/wp/econwp130.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers.php

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