Learning to cooperate in the shadow of the law
Paris : Département d'économie de Sciences Po
Sciences Po Economics Discussion Papers : 2019-06
Enforcement, Social values, Cooperation, Learning spillovers, Persistence of institutions, Repeated games, Experiments
How does the exposure to past institutions affect current cooperation? While a growing literature focuses on behavioral channels, we show how cooperation-enforcing institutions affect rational learning about the group’s value. Strong institutions, by inducing members to cooperate, may hinder learning about intrinsic values in the group. We show, using a lab experiment with independent interactions and random rematching, that participants behave in accordance with a learning model, and in particular react differently to actions of past partners whether they were played in an environment with coercive enforcement or not.