Do upfront investments increase cooperation? A laboratory experiment

Fortuna Casoria (1) , Alice Ciccone (2)

1 GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne
2 Institute of Transport Economics

We investigate whether upfront investments increase cooperation in settings with no enforcement mechanism, where cooperation is not easily sustained voluntarily. Such investments are a cost that individuals incur before deciding whether to cooperate and increase cooperation payoff. We find that cooperation rarely emerges in treatments without investments, while both endogenous and exogenous investments boost overall cooperation levels. For low endogenous investments, cooperation is lower than when the same investments are exogenous. For high investments, cooperation is not significantly different between endogenous and exogenous conditions. This supports low investments being interpreted as a signal of unwillingness to cooperate, triggering non-cooperative choices.

Mots clés: Cooperation; Upfront investments; Prisoners' dilemma; Experiment

Domaines: Economies et finances

Fortuna Casoria, Alice Ciccone. Do upfront investments increase cooperation? A laboratory experiment. 2019. ⟨halshs-02121193⟩