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Emeric Henry, Sciences Po Print
Tuesday, 16 May 2017, 14:00 - 15:15

Emeric Henry, Sciences Po

Learning, Spillovers and Persistence: Institutions and the Dynamics of Cooperation 

Abstract: Varying levels of cooperation across societies can be explained both by differences in formal institutions that govern individual interactions and by differences in prevalent values attached to cooperation. Using a lab experiment, designed to create individual specific histories of past institutional exposure we study how institutions dynamically affect values and cooperation. The empirical analysis is grounded on a theoretical model that combines spillover effects with learning about other's values. We show that being exposed to enforcement in the recent past has a strong positive effect on future cooperation. Exploiting randomization in individual institutional histories, we can show that this effect is mostly due to indirect behavioral spillovers: facing penalties in the past increases partners' cooperation in the past which in turn positively affects ones' current behavior. We demonstrate empirically that such indirect spillovers can induce persistent effects of institutions. However, for interactions that occur early on, we find a negative effect of past enforcement, due to differential learning according to the enforcement institution. 

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