Which Way to Cooperate

Authors


  •  Corresponding author: Todd R. Kaplan, Department of Economics, University of Exeter, EX44PU, UK and Department of Economics, University of Haifa, Haifa 31905, Israel. Email: dr@toddkaplan.com.

  • We thank Douglas Bernheim, Valin Dittrich, Dirk Engelmann, Jim Engle-Warnick, Naomi Feldman, Guillaume Fréchette, Andrew Muller, Jim Myton, Ariel Rubinstein, Tim Salmon, Mike Stutzer, numerous seminar and conference participants and especially two anonymous referees and the editor, David Myatt, for valuable comments. Tzvi Kerpzseld, Kadia Kohelet, Shy Maman, Tim Miller, Eran Ozery, Gad Rotman, Asaf Shaul, Tal Shavit, Ron Stern and Yael Uzen offered valuable research assistance. Kaplan thanks the Economic and Social Research Council (grant no. RES-000-22-0370) and Ruffle thanks the Israel Science Foundation (grant no. 776/03) for generous financial support.

Abstract

We introduce a two-player, binary-choice game in which both players have a privately known incentive to enter, yet the combined surplus is highest if only one enters. Repetition of this game admits two distinct ways to cooperate: turn taking and cutoffs, which rely on the player's private value to entry. A series of experiments highlights the role of private information in determining which mode players adopt. If an individual's entry values vary little (e.g. mundane tasks), taking turns is likely; if these potential values are diverse (e.g. difficult tasks that differentiate individuals by skill or preferences), cutoff cooperation emerges.

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