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Money and the Scale of Cooperation

Author

Listed:
  • Maria Bigoni

    (University of Bologna)

  • Gabriele Camera

    (Chapman University & University of Basel)

  • Marco Casari

    (University of Bologna & IZA)

Abstract

This study reveals the existence of a causal link between the availability of money and an expanded scale of interaction. We constructed an experiment where participants chose the group size, either a low-value partnership or a high-value group of strangers, and then faced an intertemporal cooperative task. Theoretically, a monetary system was inessential to achieve cooperation. Empirically, without a working monetary system, participants were reluctant to expand the scale of interaction; and when they did, they ended up destroying surplus compared to partnerships, because cooperation collapsed in large groups. This economic failure was reversed only when participants managed to concurrently develop a stable monetary system.

Suggested Citation

  • Maria Bigoni & Gabriele Camera & Marco Casari, 2015. "Money and the Scale of Cooperation," Working Papers 15-28, Chapman University, Economic Science Institute.
    • Handle: RePEc:chu:wpaper:15-28
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    References listed on IDEAS

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    More about this item

    Keywords

    Endogenous institutions; experiments; repeated games; strategic uncertainty;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy

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