Trust and Reciprocity in 2-node and 3-node Networks

Alessandra Cassar and Mary Rigdon

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we focus on the interaction between exogenous network structure and bargaining behavior in a laboratory experiment. Our main question is how competition and cooperation interact in bargaining environments based on networked versions of the investment game. We focus on 3-node networked markets and vary the network structure to model competition upstream (multiple sellers paired with a monopsonistic buyer) and competition downstream (a monopolistic seller paired with multiple buyers). We describe two kinds of models of trust for such networked environments, absolute and relativized models, and use this structure to generate a general hypothesis about these environments: that information crowds in cooperation on the competitive side of the market. The experimental results support this hypothesis.

Keywords: networks; trust; reciprocity; experiments; investment game (search for similar items in EconPapers)
JEL-codes: C91 D00 L14 (search for similar items in EconPapers)
Date: 2008-01-26
New Economics Papers: this item is included in nep-cbe, nep-com, nep-exp, nep-gth, nep-ict, nep-mic, nep-net and nep-soc
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:7005

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