Join us for an ICES Brown Bag Lecture, featuring Arno Riedl.
Prof. Riedl, of Maastricht University, will discuss his paper Market Interaction and Efficient Cooperation (Abstract). The talk will take place on Thursday, April 6th, from 12:00 to 1:00pm, in room 5075 of the Metropolitan Building, Arlington campus.
Coffee and dessert will be provided.
Please visit the Brown Bag Schedule to learn more about the Brown Bag series.
We experimentally study the effects of different types of market experience on the efficiency levels attained in a subsequent social dilemma. Our motivation stems from the existence of contrasting views on the potential spillover effects of participation in markets on non-market activities requiring cooperation. In our set-up, market interaction takes place in a continuous double auction involving a short and a long side of the market. This feature represents the very unequal opportunities that exist in some markets. Our focus is on the comparison of the efficiency levels attained in the social dilemma by pairs of individuals who were on the short side of the market, market-winners, with that of individuals who were on the long side, market-losers. We study both the cases where interaction in the social dilemma is with others from the same market, market-partners, and where it is with others from another market, market-strangers. We compare the efficiency of cooperation with and without market experience controlling for earnings, allowing us to identify the causal effects of market interaction. The results show that the experience of market interaction can have a negative, a positive or no effect at all on cooperation efficiency, depending on circumstances. For market-partners, market experience impacts cooperation efficiency negatively both for market-winners and market-losers pairs, with both types of pairs cooperating at similar levels. By contrast, in market-strangers, market experience has no negative effect. Indeed, pairs of market-winners manage to cooperate more efficiently than in the absence of previous market interaction.