You always meet twice: An experiment on intrinsic versus instrumental reciprocity

Åshild Johnsen and Ola Kvaløy

No 2014/2, UiS Working Papers in Economics and Finance from University of Stavanger

Abstract: In repeated games, it is hard to distinguish true prosocial behavior from strategic instrumental behavior. In particular, a player does not know whether a reciprocal action is intrinsically or instrumentally motivated. In this paper, we experimentally investigate the relationship between intrinsic and instrumental reciprocity by running a two-period repeated trust game. In the `strategic treatment' the subjects know that they will meet twice, while in the `non-strategic treatment' they do not know and hence the second period comes as a surprise. We find that subjects anticipate instrumental reciprocity, and that intrinsic reciprocity is rewarded. In fact, the total level of cooperation, in which trust is reciprocated, is higher in the non-strategic treatment. Instrumental reciprocity thus seems to crowd out intrinsic reciprocity: If one takes the repeated game incentives out of the repeated game

Keywords: Trust; Reciprocity; Repeated Games; Experiment (search for similar items in EconPapers)
JEL-codes: C72 C91 D03 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2014-01-28
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth and nep-soc
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