Inefficient Cooperation Under Stochastic and Strategic Uncertainty

Lisa Bruttel, Werner Güth, Juri Nithammer and Andreas Orland

Journal of Conflict Resolution, 2022, vol. 66, issue 4-5, 755-782

Abstract: Stochastic uncertainty can cause coordination problems that may hinder mutually beneficial cooperation. We propose a mechanism of ex-post voluntary transfers designed to circumvent these coordination problems and ask whether it can increase efficiency. To test this transfer mechanism, we implement a controlled laboratory experiment based on a repeated Ultimatum Game with a stochastic endowment. Contrary to our hypothesis, we find that allowing voluntary transfers does not lead to an efficiency increase. We suggest and analyze two major reasons for this failure: first, stochastic uncertainty forces proposers intending to cooperate to accept high strategic uncertainty, which many proposers avoid; second, many responders behave only incompletely conditionally cooperatively, which hinders cooperation in future periods. JEL-Classification: C78, C92, D74

Keywords: stochastic uncertainty; strategic uncertainty; cooperation; Ultimatum Game; experiment (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/00220027211066614 (text/html)

Related works:
Working Paper: Inefficient Cooperation under Stochastic and Strategic Uncertainty (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:jocore:v:66:y:2022:i:4-5:p:755-782

DOI: 10.1177/00220027211066614

Access Statistics for this article

More articles in Journal of Conflict Resolution from Peace Science Society (International)
Bibliographic data for series maintained by SAGE Publications ().