Cooperation and Trustworthiness in Repeated Interaction

Tobias Cagala (), Ulrich Glogowsky, Veronika Grimm and Johannes Rincke ()

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: Public goods provision often involves groups of contributors repeatedly interacting with administrators who can extract rents from the pool of contributions. We suggest a novel identification approach that exploits the sequential ordering of decisions in a panel vector autoregressive model to study social interactions in the laboratory. Despite rent extraction, contributors and administrators establish a stable interaction with cooperation matching the level from a comparable Public Goods Game. In the short run, temporary changes in behavior trigger substantial behavioral multiplier effects. We demonstrate that cooperation breeds trustworthiness and vice versa and that one-time disruptions are particularly damaging in settings with a lack of cooperative attitudes and trust.

Keywords: Cooperation; trustworthiness; rent extraction; methods for laboratory experiments; panel vector autoregressive model (search for similar items in EconPapers)
JEL-codes: C32 C91 C92 H41 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-gth and nep-soc
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Related works:
Working Paper: Cooperation and Trustworthiness in Repeated Interaction (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:107597

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