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Reputation or Reciprocity? An Experimental Investigation

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  • Simon Gaechter
  • Armin Falk

Abstract

Recent evidence highlights the importance of social norms in many economic relations. However, many of these relationships are long-term and provide repeated game incentives for performance. We experimentally investigate interaction effects of reciprocity and repeated game incentives in two treatments (one-shot and repeated) of a gift-exchange game. In both treatments we observe reciprocity, which is strengthened in the repeated game. A detailed analysis shows that in the repeated game some subjects imitate reciprocity. Thus, reciprocity and repeated game incentives reinforce each other. Observed behaviour is robust against experience. We conclude that a long-term interaction is a ?reciprocity-compatible? contract enforcement device.

Suggested Citation

  • Simon Gaechter & Armin Falk, 2001. "Reputation or Reciprocity? An Experimental Investigation," CESifo Working Paper Series 496, CESifo.
    • Handle: RePEc:ces:ceswps:_496
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    File URL: https://www.cesifo.org/DocDL/cesifo_wp496.pdf
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    References listed on IDEAS

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    3. Rullani, Francesco, 2005. "The three dimensions of a communitarian institution. The Open Source Software Community Case," AICCON Working Papers 16-2005, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.

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