Economic Ties and Social Dilemmas: An Experimental Study

CentER Discussion Paper No. 2004-55

39 Pages Posted: 2 Sep 2004

See all articles by Daan van Soest

Daan van Soest

Tilburg University - CentER & Department of Economics

Jana Vyrastekova

Radboud University Nijmegen - Department of Economics

Date Written: June 2004

Abstract

Agents who are tied in a social dilemma situation, often times also engage in other economic activities that require (bilateral) cooperation. We develop an economic experiment to test whether the threat of being excluded from the benefits of cooperation in such an alternative economic activity can be an effective mechanism to deter free-riding in the social dilemma situation. Modelling the former as a gift-giving game and the latter as a common pool game, we find that indeed resource extraction is closer to the socially optimal level if subjects interact with the same individuals in both activities, than if they do not. In addition, we find that sanctioning by means of exclusion is more effective the more profitable the alternative activity.

Keywords: Cooperation, noncooperative games

JEL Classification: C72, C92, D74

Suggested Citation

van Soest, Daan P. and Vyrastekova, Jana, Economic Ties and Social Dilemmas: An Experimental Study (June 2004). CentER Discussion Paper No. 2004-55. Available at SSRN: https://ssrn.com/abstract=585061 or http://dx.doi.org/10.2139/ssrn.585061

Daan P. Van Soest (Contact Author)

Tilburg University - CentER & Department of Economics ( email )

P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 2072 (Phone)

Jana Vyrastekova

Radboud University Nijmegen - Department of Economics ( email )

Nijmegen, 6500 HK
Netherlands

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