Abstract

We conduct a laboratory experiment aimed at examining whether strategic substitutability and strategic complementarity have an impact on the tendency to cooperate in finitely repeated two-player games with a Pareto-inefficient Nash equilibrium. We find that there is significantly more cooperation when actions exhibit strategic complementarities than in the case of strategic substitutes. The difference is to some extent driven by a difference in the speed with which some pairs reach stable full cooperation, but mainly by differences in choices of pairs that do not succeed in reaching full cooperation.

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