Expectations of Reciprocity when Competitors Share Information: Experimental Evidence

49 Pages Posted: 4 Sep 2019

See all articles by Bernhard Ganglmair

Bernhard Ganglmair

ZEW – Leibniz Centre for European Economic Research - Junior Research Group Competition and Innovation; University of Mannheim - Department of Economics; Mannheim Centre for Competition and Innovation (MaCCI)

Alex Holcomb

Appalachian State University

Noah Myung

University of Virginia

Multiple version iconThere are 2 versions of this paper

Date Written: August 16, 2019

Abstract

Informal exchange of information among competitors has been well-documented in a variety of industries, and one's expectation of reciprocity shown to be a key determinant. We use an indeterminate horizon centipede game to establish a feedback loop in the laboratory and show that an individual's beliefs about the recipient's intentions to reciprocate matter more than a recipient's ability to do so. This implies that reducing strategic uncertainty about a competitor's behavior has a stronger effect on information flows than reducing environmental uncertainty (about the competitor's ability). We further show results on the formation of beliefs and discuss managerial implications.

Keywords: knowledge diffusion; information sharing; reciprocity; conversation; experimental economics; centipede game

JEL Classification: O33, D8, C72, C91

Suggested Citation

Ganglmair, Bernhard and Holcomb, Alex and Myung, Noah, Expectations of Reciprocity when Competitors Share Information: Experimental Evidence (August 16, 2019). ZEW - Centre for European Economic Research Discussion Paper No. 19-032, 8/2019, Available at SSRN: https://ssrn.com/abstract=3446582 or http://dx.doi.org/10.2139/ssrn.3446582

Bernhard Ganglmair (Contact Author)

ZEW – Leibniz Centre for European Economic Research - Junior Research Group Competition and Innovation ( email )

L7,1
Mannheim, 68161
Germany

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany

Mannheim Centre for Competition and Innovation (MaCCI) ( email )

L 7, 1
Mannheim, 68131
Germany

Alex Holcomb

Appalachian State University ( email )

Boone, NC 28608
United States

Noah Myung

University of Virginia ( email )

1400 University Ave
Charlottesville, VA 22903
United States

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