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

94 Pages Posted: 6 Nov 2017 Last revised: 5 Feb 2020

See all articles by Nina Serdarevic

Nina Serdarevic

University of Bergen - Department of Economics

Eirik Stromland

University of Bergen

Sigve Tjotta

University of Bergen - Department of Economics

Date Written: July 5, 2019

Abstract

We contribute 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. The results from three experiments show that mutual partner choice enables cooperators to outperform free riders; cooperators tend to earn more than free riders and are less frequently excluded. Our findings are robust with respect to varying group size and whether subjects are reminded about their entire or only their recent partner and contribution history.

Keywords: cooperation; endogenous partner choice; preference evolution

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 (July 5, 2019). 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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