Investing to cooperate: theory and experiment

Benoit, J-P, Galbiati, R and Henry, E (2017) Investing to cooperate: theory and experiment. Journal of Economic Behavior and Organization, 144 (Dec.). pp. 1-17. ISSN 0167-2681 OPEN ACCESS

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.

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Item Type: Article
Subject Areas: Economics
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© 2017 Elsevier

Date Deposited: 20 Sep 2017 11:11
Date of first compliant deposit: 18 Oct 2017
Subjects: Experiments
Investment theory
Last Modified: 28 Mar 2023 00:33
URI: https://lbsresearch.london.edu/id/eprint/890
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