Expectations of Reciprocity and Feedback when Competitors Share Information: Experimental Evidence
54 Pages Posted: 26 Mar 2015 Last revised: 25 Aug 2018
Date Written: August 22, 2018
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: Suggested Citation