Social Relations in the Workplace: A 'Linked Games' Approach

Abstract:     
The paper analyzes how cooperation in a repeated social game may help to sustain cooperation in a "linked" repeated production game. We show that this may happen a) because of available "social capital," defined as the slack of punishment power present in the social repeated game; b) because, when agents' utility functions are strictly concave in the outcome of the two games, a simultaneous punishment in the linked games turns out to be a stronger threat than the sum of the independent punishments in the two component games; and c) because the linkage between two repeated games may generate transfers of "trust."

JEL Classification: C73, D23, D73, M12

working papers series