It Pays to Be Nice: The Benefits of Cooperating in Markets

51 Pages Posted: 6 Nov 2017 Last revised: 23 Sep 2018

Nina Serdarevic

University of Bergen - Department of Economics

Eirik Stromland

University of Bergen

Sigve Tjotta

University of Bergen - Department of Economics

Date Written: September 13, 2018

Abstract

This paper contributes to the experimental literature by examining the causal effect of partner-choice opportunities on the earnings of different cooperative types. We first elicit cooperative types and then randomly assign subjects to a repeated prisoner’s dilemma game with either mutual partner choice or random matching. In each round, the individual who fails to attain a partner is excluded from the group. This design allows us to study the causal effect of partner choice on earnings and exclusion. The results from two experiments show that partner choice allows cooperators to outperform free riders, cooperators earn more than free riders, and cooperators are less frequently excluded.

Keywords: cooperation, commitment, partner choice, punishment

JEL Classification: D02, C91, C92

Suggested Citation

Serdarevic, Nina and Stromland, Eirik and Tjotta, Sigve, It Pays to Be Nice: The Benefits of Cooperating in Markets (September 13, 2018). Available at SSRN: https://ssrn.com/abstract=3063883 or http://dx.doi.org/10.2139/ssrn.3063883

Nina Serdarevic (Contact Author)

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway
+4790943658 (Phone)

Eirik Stromland

University of Bergen ( email )

Muséplassen 1
N-5008 Bergen, +47 55 58
Norway

Sigve Tjotta

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

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