Reputation or Reciprocity? An Experimental Investigation

Simon Gaechter and Armin Falk
Authors registered in the RePEc Author Service: Simon Gächter

No 496, CESifo Working Paper Series from CESifo

Abstract: Recent evidence highlights the importance of social norms in many economic relations. However, many of these relationships are long-term and provide repeated game incentives for performance. We experimentally investigate interaction effects of reciprocity and repeated game incentives in two treatments (one-shot and repeated) of a gift-exchange game. In both treatments we observe reciprocity, which is strengthened in the repeated game. A detailed analysis shows that in the repeated game some subjects imitate reciprocity. Thus, reciprocity and repeated game incentives reinforce each other. Observed behaviour is robust against experience. We conclude that a long-term interaction is a ?reciprocity-compatible? contract enforcement device.

Keywords: Reciprocity; reputation; repeated games; incomplete contracts (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (4)

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