Reciprocity with stochastic loss

Nathan Chan and Leonard Wolk ()
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Leonard Wolk: Vrije Universiteit Amsterdam

Journal of the Economic Science Association, 2023, vol. 9, issue 1, No 5, 65 pages

Abstract: Abstract We introduce stochastic loss into a gift exchange game to study how information on intentions affects reciprocity. In one treatment, the respondent observes the amount received and whether a loss occurred, so both the consequential outcome and the sender’s original intention are known. In the other two treatments, information about whether a loss occurred is hidden, and the respondent is only informed of the amount received (outcome) or the amount initially sent (intention). Using both regression-based approaches and non-parametric tests, we find greater reciprocity in the two treatments that reveal intentions. These differences arise even in a simple one-shot setting without reputational benefits and are economically meaningful; they are similar in magnitude to the difference attributable to a full point reduction in the amount received. Our findings show the impact of the information environment on reciprocity in settings with uncertainty and suggest that transparency is important to reciprocity.

Keywords: Reciprocity; Gift exchange; Uncertainty; Information (search for similar items in EconPapers)
JEL-codes: C72 C91 D80 D91 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s40881-023-00129-3

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