Cooperation in Partnerships: The Role of Breakups and Reputation

Ralph-C. Bayer
2016 Journal of Institutional and Theoretical Economics  
We investigate experimentally if endogenous partnership formation can improve e¢ ciency in social dilemma situations. Subjects play multiple two-player public goods games, where they can break up with their current partner after every fourth game. Subjects without a partner provide rankings of the available other singles regarding their preferred subject to be matched with. A stable marriage mechanism determines the new matches. We vary the information subjects have when they express their
more » ... express their preferences for their future matches and also if staying in a partnership leads to a cost or a bonus. We ...nd that endogenous group formation can increase e¢ ciency. Both the provision of contribution history at the time of re-matching and bonuses for staying in a partnership have positive e¤ects. At least one of the two positive factors has to be present for an e¢ ciency improvement. The presence of both leads to the best results. JEL: D03, D83, H41
doi:10.1628/093245616x14610627109836 fatcat:vvsfqwzehjeyfonz3pqkcjxbra