Expectations of Reciprocity and Feedback when Competitors Share Information: Experimental Evidence

54 Pages Posted: 26 Mar 2015 Last revised: 25 Aug 2018

See all articles by Bernhard Ganglmair

Bernhard Ganglmair

ZEW – Leibniz Centre for European Economic Research - Competition and Regulation Research Group; University of Mannheim - Department of Economics

Alex Holcomb

University of Texas at El Paso - College of Business Administration; University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

Noah Myung

University of Virginia

Date Written: August 22, 2018

Abstract

Informal know-how trading and exchange of information among competitors has been well-documented for a variety of industries, including in science and R&D, and an individual's expectations of reciprocity is understood to be a key determinant of such flow of information. We establish a feedback loop (as a representation of information trading) in the laboratory and show that an individual's expectations of the recipient's intentions to reciprocate matter more than a recipient's ability to do so. This implies that reducing strategic uncertainty about competitors' behavior has a bigger effect on the flow of information than reducing environmental uncertainty (about their ability to generate new information). We also show that the formation of beliefs about a recipient's intentions to reciprocate are heavily influenced by past experience, where prior experience lingers and can have negative effects on the sustainability of productive and fruitful information exchange.

Keywords: knowledge diffusion; information sharing; reciprocity; collective innovation; R&D; conversation; experimental economics; centipede game

JEL Classification: O33, D8, C72, C91

Suggested Citation

Ganglmair, Bernhard and Holcomb, Alex and Myung, Noah, Expectations of Reciprocity and Feedback when Competitors Share Information: Experimental Evidence (August 22, 2018). Available at SSRN: https://ssrn.com/abstract=2584708 or http://dx.doi.org/10.2139/ssrn.2584708

Bernhard Ganglmair (Contact Author)

ZEW – Leibniz Centre for European Economic Research - Competition and Regulation Research Group ( email )

L7,1
Mannheim, 68161
Germany

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany

Alex Holcomb

University of Texas at El Paso - College of Business Administration ( email )

University Library - Acquisitions Department
500 West University Avenue
El Paso, TX 79968
United States

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics ( email )

2601 North Floyd Road
P.O. Box 830688
Richardson, TX 75083
United States

Noah Myung

University of Virginia ( email )

1400 University Ave
Charlottesville, VA 22903
United States

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