Inefficient Cooperation Under Stochastic and Strategic Uncertainty

Inefficient Cooperation Under Stochastic and Strategic Uncertainty

Stochastic uncertainty can cause coordination problems that may hinder mutually beneficial cooperation. We propose a mechanism of ex-post voluntary transfers designed to circumvent these coordination problems and ask whether it can increase efficiency. To test this transfer mechanism, we implement a...

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Veröffentlicht in:The Journal of conflict resolution 2022-05, Vol.66 (4-5), p.755-782
Hauptverfasser: Bruttel, Lisa, Güth, Werner, Nithammer, Juri, Orland, Andreas
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Sprache:eng
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Classification
Conflict resolution
Cooperation
Coordination
Uncertainty
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container_title The Journal of conflict resolution
container_volume 66
creator Bruttel, Lisa
Güth, Werner
Nithammer, Juri
Orland, Andreas
description Stochastic uncertainty can cause coordination problems that may hinder mutually beneficial cooperation. We propose a mechanism of ex-post voluntary transfers designed to circumvent these coordination problems and ask whether it can increase efficiency. To test this transfer mechanism, we implement a controlled laboratory experiment based on a repeated Ultimatum Game with a stochastic endowment. Contrary to our hypothesis, we find that allowing voluntary transfers does not lead to an efficiency increase. We suggest and analyze two major reasons for this failure: first, stochastic uncertainty forces proposers intending to cooperate to accept high strategic uncertainty, which many proposers avoid; second, many responders behave only incompletely conditionally cooperatively, which hinders cooperation in future periods. JEL-Classification: C78, C92, D74
doi_str_mv 10.1177/00220027211066614
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subjects Classification
Conflict resolution
Cooperation
Coordination
Uncertainty
title Inefficient Cooperation Under Stochastic and Strategic Uncertainty
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