Repeated Interaction and Its Impact on Cooperation and Surplus Allocation—An Experimental Analysis

Abstract

This paper investigates how the possibility of affecting group composition combined with the possibility of repeated interaction impacts cooperation within groups and surplus distribution. We developed and tested experimentally a Surplus Allocation Game where cooperation of four agents is needed to produce surplus, but only two have the power to allocate it among the group members. Three matching procedures (corresponding to three separate experimental treatments) were used to test the impact of the variables of interest. A total of 400 subjects participated in our research, which was computer-based and conducted in a laboratory. Our results show that allowing for repeated interaction with the same partners leads to a self-selection of agents into groups with different life spans, whose duration is correlated with the behavior of both distributors and receivers. While behavior at the group level is diverse for surplus allocation and amount of cooperation, aggregate behavior is instead similar when repeated interaction is allowed or not allowed. We developed a behavioral model that captures the dynamics observed in the experimental data and sheds light into the rationales that drive the agents’ individual behavior, suggesting that the most generous distributors are those acting for fear of rejection, not for true generosity, while the groups lasting the longest are those composed by this type of distributors and “undemanding” receivers.

Inferring Strategies from Observations in Long Iterated Prisoner's Dilemma Experiments

“…Repeated interactions with the same partner thus lead to behavioral self-selection of participants into behavioral clusters . Similar results were previously observed in a Surplus Allocation game [60], wherein participants could themselves decide to continue with the same group, leading to a behavioral self-selection of groups of short and long duration, where the latter corresponded to cooperative ones.…”

The self-organizing impact of averaged payoffs on the evolution of cooperation

“…This protocol is in stark contrast to general average process applied in mean-field calculations and in some previous spatial models [57,58]. Evidently, to collect additional information from the neighborhood requires a high cognitive skill from a learner that was detected in previous human experiments [59,60,61,62].…”