On Symbols and Cooperation

KU Leuven, Department of Economics, Discussion Paper Series, DPS16.18, September, 2016

37 Pages Posted: 21 Sep 2016

See all articles by Tom Potoms

Tom Potoms

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Tom Truyts

KU Leuven - Faculty of Business and Economics (FEB); Facultés Universitaires Saint Louis à Bruxelles; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Date Written: September 2016

Abstract

How are group symbols (e.g., a flag, a Muslim veil, a clothing style) helpful in sustaining cooperation and social norms? We study the role of symbols in an infinitely repeated public goods game with random matching, endogenous partnership termination, limited information ‡flows and endogenous symbol choice. We characterize an efficient segregating equilibrium, in which players only cooperate with others bearing the same symbol. In this equilibrium, players bearing a scarcer symbol face a longer expected search time to find a cooperative partner upon partnership termination, and this sacrifice of outside options allows them to sustain higher levels of cooperation. We compare this equilibrium to other equilibria in terms of renegotiation proofness, and we discuss the relation this has to the evolution of intolerance.

JEL Classification: C73, D83

Suggested Citation

Potoms, Tom and Truyts, Tom, On Symbols and Cooperation (September 2016). KU Leuven, Department of Economics, Discussion Paper Series, DPS16.18, September, 2016, Available at SSRN: https://ssrn.com/abstract=2841128 or http://dx.doi.org/10.2139/ssrn.2841128

Tom Potoms (Contact Author)

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium

Tom Truyts

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Facultés Universitaires Saint Louis à Bruxelles ( email )

Boulevard du Jardin Botanique 43
Bruxelles, 1000
Belgium

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

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