Investing to cooperate : theory and experiment
Journal
Journal of Economic Behavior and Organization
Subject
Economics
Publishing details
Authors / Editors
Benoit J-P;Galbiati R;Henry E
Biographies
Publication Year
2017
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 more volatile returns make investment more difficult in the absence of legal protection, and might force the investor to invest more to guarantee cooperation. Experimental results are broadly consistent with the theoretical findings.
Keywords
Investment; Experiments; Repeated games; Property rights
Available on ECCH
No