Alternating or Compensating? An Experiment on the Repeated Sequential Best Shot Game

Lisa Bruttel and Werner Güth ()

No 2013-24, Working Paper Series of the Department of Economics, University of Konstanz from Department of Economics, University of Konstanz

Abstract: In the two-person sequential best shot game, first player 1 contributes to a public good and then player 2 is informed about this choice before contributing. The payoff from the public good is the same for both players and depends only on the maximal contribution. Efficient voluntary cooperation in the repeated best shot game therefore requires that only one player should contribute in a given round. To provide better chances for such cooperation, we enrich the sequential best shot base game by a third stage allowing the party with the lower contribution to transfer some of its periodic gain to the other party. Participants easily establish cooperation in the finitely repeated game. When cooperation evolves, it mostly takes the form of 'labor division,' with one participant constantly contributing and the other constantly compensating. However, in a treatment in which compensation is not possible, (more or less symmetric) alternating occurs frequently and turns out to be almost as efficient as labor division.

Keywords: best shot game; coordination; transfer; experiment (search for similar items in EconPapers)
JEL-codes: C71 C73 C91 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2013-10-31
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-evo, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Alternating or compensating? An experimentrepeated sequential best shot game (2013)
Working Paper: Alternating or compensating? An experiment on the repeated sequential best shot game (2013)
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