Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/76421
Title: At-will relationships : how an option to walk away affects cooperation and efficiency
Authors: Wilson, AJ
Wu, H 
Keywords: Outside options
Endogenous termination
Dissolution clauses
Imperfect public monitoring
Dynamic games
Issue Date: 2017
Publisher: Academic Press
Source: Games and economic behavior, 2017, v. 102, p. 487-507 How to cite?
Journal: Games and economic behavior 
Abstract: We theoretically and experimentally examine the effects from adding a simple, empirically relevant action to a repeated partnership, the option to walk away. Manipulating both the value of the outside option, and its relative distribution among the partners, we examine the behavior of human subjects in a repeated prisoners' dilemma. In particular, we examine the degree of cooperation and the form of punishments used. Our findings indicate that cooperation rates are broadly unaffected by the value of the common outside option, but that the selection of supporting punishments in-relationship defections or walking-away are dictated by individual rationality. In contrast to the symmetric results, when outside options for partners are asymmetric we find stark selection effects over cooperation, with the potential for very high and very low efficiency, dependent on the precise division rule.
URI: http://hdl.handle.net/10397/76421
ISSN: 0899-8256
EISSN: 1090-2473
DOI: 10.1016/j.geb.2017.02.007
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