Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144886
Authors: 
Ispano, Alessandro
Schwardmann, Peter
Year of Publication: 
2016
Series/Report no.: 
Munich Discussion Paper 2016-2
Abstract: 
Evidence from studies in international relations, the politics of reform, collective action and price competition suggests that economic agents in social dilemma situations cooperate more to avoid losses than in the pursuit of gains. To test whether the prospect of losses can induce cooperation, we let experimental subjects play the traveler's dilemma in the gain and loss domain. Subjects cooperate substantially more over losses. Our experimental design allows us to show that this treatment effect is best explained by reference-dependent risk preferences and referencedependent strategic sophistication. We discuss policy implications and relate our findings to other experimental games played in the loss domain.
Subjects: 
cooperation
traveler's dilemma
social dilemma
loss domain
diminishing sensitivity
cognitive hierarchy
JEL: 
C90
D01
D03
D81
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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