Market Competition and Efficient Cooperation

J. Brandts, Arno Riedl

Research output: Working paperProfessional

Abstract

We find that in market-partners, market experience has adverse effects on the efficiency of cooperation on both market-winner and market-loser pairs. In market-strangers, pairs of market-winners manage to cooperate more efficiently. These results indicate that it is not market experience per se that lowers the ability to cooperate. Rather, having competed for scarce resources on the same side of the market makes it difficult to overcome the social dilemma and positive market experience fosters cooperation only for those who did not have to compete with each other. We also show that differences in cooperation cannot be explained by ex-ante income differences and find that market experience also affects subjective well-being and social value orientation.
Original languageEnglish
Place of PublicationMunich
PublisherCESifo
Publication statusPublished - 2016

Publication series

SeriesCESifo Working Papers
Number5694

JEL classifications

  • a13 - Relation of Economics to Social Values
  • c92 - Design of Experiments: Laboratory, Group Behavior
  • d30 - Distribution: General
  • j50 - Labor-Management Relations, Trade Unions, and Collective Bargaining: General
  • m50 - Personnel Economics: General

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