Relationships Building with Outside Opportunities: The Role of Altruism Dynamics
48 Pages Posted: 30 Apr 2015
Date Written: April 28, 2015
It is intuitive to think that the introduction of outside opportunities in bilateral interactions would weaken a personal relationship. This paper presents a laboratory experiment based on a repeated risk sharing game to show that, quite surprisingly, the introduction of a temporary and unexpected outside opportunity contributed to building long-term relationships. This occurred primarily when the paired agents exhibited asymmetric reactions to the opportunity. We explain this result via a model of altruism dynamics, in which agents who took/resisted the opportunity demonstrated positive/negative reciprocity toward the other party. The positive change tended to dominate the negative one and led to better long-term interpersonal relationships.
Keywords: relationship, outside opportunity, altruism, reciprocity, risk sharing
JEL Classification: C91, D81, O17
Suggested Citation: Suggested Citation