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Trust and Reciprocity in 2-node and 3-node Networks

Author

Listed:
  • Alessandra Cassar, ac
  • Mary Rigdon, mr

Abstract

In this paper we focus on the interaction between exogenous network structure and bargaining behavior in a laboratory experiment. Our main question is how competition and cooperation interact in bargaining environments based on networked versions of the investment game. We focus on 3-node networked markets and vary the network structure to model competition upstream (multiple sellers paired with a monopsonistic buyer) and competition downstream (a monopolistic seller paired with multiple buyers). We describe two kinds of models of trust for such networked environments, absolute and relativized models, and use this structure to generate a general hypothesis about these environments: that information crowds in cooperation on the competitive side of the market. The experimental results support this hypothesis.

Suggested Citation

  • Alessandra Cassar, ac & Mary Rigdon, mr, 2008. "Trust and Reciprocity in 2-node and 3-node Networks," MPRA Paper 7005, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:7005
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    File URL: https://mpra.ub.uni-muenchen.de/7005/1/MPRA_paper_7005.pdf
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    Cited by:

    1. Di Cagno, Daniela & Sciubba, Emanuela, 2010. "Trust, trustworthiness and social networks: Playing a trust game when networks are formed in the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 75(2), pages 156-167, August.

    More about this item

    Keywords

    networks; trust; reciprocity; experiments; investment game;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • D00 - Microeconomics - - General - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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