On The Economic Value of Repeated Interactions Under Adverse Selection

Lorenzo Rocco and Ottorino Chillem
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Ottorino Chillem: Università di Padova

No 2006.73, Working Papers from Fondazione Eni Enrico Mattei

Abstract: The paper studies, in a repeated interaction setting, how the presence of cooperative agents in a heterogeneous community organized in groups affects efficiency and group stability. The paper expands on existing literature by assuming that each type can profitably mimic other types. It is shown that such enlargement of profitable options prevents group stabilization in the single group case. Stabilization can be obtained with many groups, but its driver is not the efficiency gain due to the presence of cooperative individuals. Rather, stabilization is the result of free riding opportunities.

Keywords: Adverse Selection; Group Stability; Altruism (search for similar items in EconPapers)
JEL-codes: D64 D71 D82 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-mic and nep-soc
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Related works:
Working Paper: On The Economic Value of Repeated Interactions Under Adverse Selection (2006)
Working Paper: On the economic value of repeated interactions under adverse selection (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2006.73

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