Measuring Competitiveness and Cooperativeness

Abstract

We develop an index of competitiveness and cooperativeness which is based on the primitives of a normal-form game, i.e., players, strategies and payoffs. The index relies on a unique decomposition of a given game into a zero-sum game and a common-interest game. The index decreases in the distance to its zero-sum part and it increases in the distance to its common-interest part. Alternatively, the index increases if the share of variation in payoffs captured by the zero-sum part increases. We compute our index for well-known classes of games such as Prisoner's Dilemma, games with Strategic Complements and Substitutes, All-pay auctions, Tullock contests, and Public Goods games. The comparative statics of our index coincide with economic intuition. The index does well in explaining experimental findings in the sense that more cooperative and less competitive behavior correlates with lower values of the index.

Keywords: Competitiveness, cooperativeness, index

JEL Classification: C72