Social Learning of Efficiency Enhancing Trade With(out) Market Entry Costs - An experimental study

Nadine Chlaß (), Werner Güth () and Christoph Vanberg ()

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: We investigate experimentally whether entry costs have an impact on the evolution of cooperation in a social dilemma game. In particular, subjects repeatedly play the so-called takeover game with anonymous partners randomly drawn from a fixed population of participants. The game represents a social dilemma because selfishly rational players can fail to make efficient trades due to information asymmetries. In order to create a potential for social learning, we provide subjects with feedback about average results in the population. Our interest lies in observing the extent to which cooperative behaviors facilitating trade are adopted. Our main conjecture is that market entry costs inspire more trade. This is only partly confirmed by the data.

Keywords: Cooperation; sunk costs; social learning; takeover game (search for similar items in EconPapers)
JEL-codes: C78 C91 C92 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-ind and nep-soc
Date: Written
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