Cooperation over Finite Horizons: A Theory and Experiments
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Author(s)
Ambrus, Attila
Pathak, Parag
Date Issued
September 2010
Journal
Journal of Public Economics
Publisher
Elsevier B.V.
Citation
Ambrus, Attila and Parag A. Pathak. "Cooperation over Finite Horizons: A Theory and Experiments." Journal of Public Economics, 95 (2011) 500–512.
Version
Author's final manuscript
Abstract
This paper shows that the presence of different types of players { those who only care about
their own material payoffs and those who reciprocate others' contributions { can explain the robust
features of observed contribution patterns in public good contribution games, even without the
presence of asymmetric information. We show what conditions on reciprocity are sufficient for a
unique perfect equilibrium, in which contributions are decreasing. Under these conditions, selfish
players have enough future benefits to induce subsequent contributions by reciprocal players, and
this incentive diminishes as the end of the game approaches. The model explains the puzzling
restart effect and is consistent with various other empirical findings. We also report the results of a series of experiments, using a probabilistic continuation design in which after each set of 10-period games, the group is restarted with low probability. We find specfic support for the theory in our data, including that selfish players (identified exogenously) stop contributing earlier than reciprocal players, as directly implied by the model.
MIT Department
Massachusetts Institute of Technology. Department of Economics
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