Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92392
Authors: 
Schneider, Frédéric
Weber, Roberto A.
Year of Publication: 
2013
Series/Report no.: 
Working Paper Series, University of Zurich, Department of Economics 130
Abstract: 
We study how the willingness to enter long-term bilateral relationships affects cooperation even when parties have little information about each other, ex ante, and cooperation is otherwise unenforceable. We experimentally investigate a finitely-repeated Prisoner's Dilemma, allowing players to endogenously select interaction durations. Consistent with prior research, longer interactions facilitate cooperation. However, many individuals avoid long-term commitment, with uncooperative types less likely to commit than conditional cooperators. Endogenously chosen long-term commitment yields higher cooperation rates (98% in one condition) than exogenously imposed commitment. Thus, the willingness to enter into long-term relationships provides a means for fostering - and screening for - efficient cooperation.
Subjects: 
Repeated games
cooperation
voluntary commitment
JEL: 
C72
C92
D03
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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