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Social pressure,uncertainty, and cooperation
Authors:Steffen Huck  Dorothea Kübler
Affiliation:1.Department of Economics, Royal Holloway, University of London, Egham, Surrey TW20 0EX, United Kingdom (e-mail: S.Huck@rhbnc.ac.uk),GB;2.Humboldt–University, Department of Economics, Institute for Economic Theory, Spandauer Stra?e 1, D–10178 Berlin, Germany (e-mail: kuebler@wiwi.hu-berlin.de),DE
Abstract:We analyse the role of uncertainty in a sequential game where players have to decide whether to contribute to a public project or not. A player's payoff may depend on his belief about the other player's action which allows us to model social pressure. Using the theory of psychological games, we show that the players' propensity to choose an individually costly action such as cooperation in a public project may increase if there is some uncertainty about who has cooperated before. A central agency, e.g. the government, can induce incomplete information by using a randomization policy, thus crowding in private contributions. Received: November 16, 1998 / Accepted: May 31, 1999
Keywords:: social pressure   psychological games   cooperation
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