Working Paper Series,
Norwegian University of Life Sciences, School of Economics and Business

Abstract: Cooperation is usually presented as prosocial and for the common good. But collusion is also a form of cooperation, where the gains from cooperation are at the public’s expense. How is collusion affected by this public aspect? Social preferences can mean caring for the public. But it can also mean caring for the bilateral relationship with one’s partner. This paper investigates cooperation when it is at the expense of the public, and compares it to cooperation when it is not at the public’s expense. I do so by running two versions of an infinitely repeated prisoner’s dilemma game: One version with and one without a public aspect. I find that there is more collusion when collusion is at the expense of the public conspiracy against the public.

Keywords: Infinitely repeated prisoner’s dilemma game; Negative externality; Cooperation; Collusion; Experiment

JEL-codes: C91; D03; D62; H41

27 pages, May 3, 2017

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