Expectations of Reciprocity when Competitors Share Information: Experimental Evidence
47 Pages Posted: 26 Mar 2015 Last revised: 25 Aug 2019
Date Written: August 16, 2019
Informal exchange of information among competitors has been well-documented in a variety of industries, and one's expectation of reciprocity shown to be a key determinant. We use an indeterminate horizon centipede game to establish a feedback loop in the laboratory and show that an individual's beliefs about the recipient's intentions to reciprocate matter more than a recipient's ability to do so. This implies that reducing strategic uncertainty about a competitor's behavior has a stronger effect on information flows than reducing environmental uncertainty (about the competitor's ability). We further show results on the formation of beliefs and discuss managerial implications.
Keywords: knowledge diffusion; information sharing; reciprocity; conversation; experimental economics; centipede game
JEL Classification: O33, D8, C72, C91
Suggested Citation: Suggested Citation