Long-term commitment and cooperation

Frédéric Schneider and Roberto Weber

No 130, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: We study how the willingness to enter long-term bilateral relationships affects cooperation even when parties have little information about each other, ex ante, and cooperation is otherwise unenforceable. We experimentally investigate a finitely-repeated Prisoner’s Dilemma, allowing players to endogenously select interaction durations. Consistent with prior research, longer interactions facilitate cooperation. However, many individuals avoid long-term commitment, with uncooperative types less likely to commit than conditional cooperators. Endogenously chosen long-term commitment yields higher cooperation rates (98% in one condition) than exogenously imposed commitment. Thus, the willingness to enter into long-term relationships provides a means for fostering - and screening for - efficient cooperation.

Keywords: Repeated games; cooperation; voluntary commitment (search for similar items in EconPapers)
JEL-codes: C72 C92 D03 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-evo, nep-exp, nep-gth, nep-hpe and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:130

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