Which Way to Cooperate
Todd R. Kaplan
University of Exeter Business School - Department of Economics; University of Haifa - Department of Economics
Bradley J. Ruffle
Wilfrid Laurier University - Department of Economics; Ben-Gurion University of the Negev - Department of Economics
We introduce a two-player, binary-choice game in which both players have a privately known incentive to enter, yet the combined surplus is highest if only one enters. Repetition of this game admits two distinct ways to cooperate: turn taking and cutoffs, which rely on the player's private value to entry. A series of experiments highlights the role of private information in determining which mode players adopt. If an individual's entry values vary little (e.g., mundane tasks), taking turns is likely; if these potential values are diverse (e.g., difficult tasks that differentiate individuals by skill or preferences), cutoff cooperation emerges.
Number of Pages in PDF File: 43
Keywords: experimental economics, cooperation, incomplete information, alternating, cutoff strategies, random payoffs
JEL Classification: C90, Z13working papers series
Date posted: June 4, 2007 ; Last revised: October 3, 2011
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