Market interaction and efficient cooperation

Jordi Brandts*, Arno Riedl

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

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Abstract

We experimentally study causal effects of competitive experience in markets with a short and a long side on efficiency levels attained in a subsequent social dilemma. We find that market experience affects efficiency when traders previously competed in the same market on the same side. The effect is strong for market-loser pairs and also exists for market-winner pairs, albeit to a lesser extent. Cooperation efficiency is unaffected for pairs consisting of a market-winner and a market-loser. When traders did not interact on the same market before, efficiency of cooperation is higher for market-winner pairs, but only in the short run. (C) 2019 Elsevier B.V. All rights reserved.
Original languageEnglish
Article number103318
Number of pages19
JournalEuropean Economic Review
Volume121
DOIs
Publication statusPublished - Jan 2020

JEL classifications

  • a13 - Relation of Economics to Social Values
  • c92 - Design of Experiments: Laboratory, Group Behavior
  • d30 - Distribution: General
  • d60 - Welfare Economics: General

Keywords

  • Competitive market
  • Social dilemma
  • Experiment
  • SOCIAL PREFERENCES
  • DYNAMICS
  • TIES

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