Investing to Cooperate:Theory and Experiment

Jean-Pierre Benoît, Roberto Galbiati and Emeric Henry
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Jean-Pierre Benoît: London Business School

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Abstract: We study theoretically and in a lab-experiment investment decisions in environments where property rights are absent. In our setting a player chooses an investment level before interacting repeatedly with a given set of agents. The investment stochastically affects the payoffs of the game in every subsequent period. We show that investments with less volatile returns are more likely to be observed since they facilitate cooperation. We also show that the investor might be forced to invest more than he would in an environment with legal protection, to keep other players cooperative. Experimental results are broadly consistent with the theoretical findings.

Keywords: Investment; Experiments; Repeated games; Property rights (search for similar items in EconPapers)
Date: 2013-01-01
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03473941
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Related works:
Journal Article: Investing to cooperate: Theory and experiment (2017)
Working Paper: Investing to Cooperate: Theory and Experiment (2014)
Working Paper: Investing to Cooperate: Theory and Experiment (2014)
Working Paper: Investing to Cooperate:Theory and Experiment (2013)
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