Growing CooperationGeorg Kirchsteiger

13. Juni 2024

Georg Kirchsteiger (Université Libre de Bruxelles) will present his paper "Growing Cooperation" as part of the Microeconomics Seminar,  VMP 5, room 0079,  17h15-18h30.

Abstract:

Experimental evidence shows that in repeated dilemma cooperation is more likely to become the norm in small groups that in large groups even if cooperation is an equilibrium outcome for all investigated group sizes.
But what happens if small groups are merged to become large ones? Our paper is based on the idea that due to norm spillovers a large group created by a merger of small groups is more likely to cooperate than a large group
of similar size that is created directly. Our paper tests this idea experimentally by comparing two treatments. The growth treatment (GT) consisted of three parts. In the first part groups of two subjects played a repeated
prisoners dilemma. In the second stage pairs of two-subject groups were merged resulting in four-subject groups. These four-subject groups played the repeated prisoner's dilemma with random partner choice. In the third stage
of the GT pairs of four-subject groups were merged resulting in eight-subject groups playing again the repeated prisoner's dilemma with random partner choice. In the control treatment (CT) groups of eight are formed that
played the repeated prisoner's dilemma with random partner choice, replicating the third part of GT. We chose the parameters such that due to the folk theorem in both treatments and for all group sizes cooperation as well
as non-cooperation were equilibrium outcomes. In line with previous experimental results, cooperation rates decreased in the GT treatment when the group size increased. But when comparing the results of the CT with
those of the third stage GT we found much higher cooperation rates in the GT. This shows that cooperation is much more likely to be achieved when groups grow from small to large than when the large groups are formed
directly.