New research: Mutual choice of partner and communication in a repeated prisoner's dilemma
The paper "Mutual choice of partner and communication in a repeated prisoner's dilemma" was published in the Journal of Behavioral and Experimental Economics. The paper is written by Professor Gaute Torsvik at OFS, together with Eirik Strømland and Sigve Tjøtta.
Many markets resemble repeated prisoner's dilemma situations with the possibilities for mutual partner choice. In this paper, we show experimentally that partner choice by mutual consent has a strong positive effect on cooperation. Mutual partner choice makes it possible to form long-lasting reciprocal partnerships. To understand partnership formation we also add a treatment where the participants could communicate with each other in a common chat room. Chat transcript reveals that promises are important in forming and sustaining a partnership.
The full article can be accessed here.