Substitutability in Cooperation and Bilateral Enforcement

52 Pages Posted: 18 Nov 2021 Last revised: 18 Aug 2022

See all articles by Oguzhan Celebi

Oguzhan Celebi

Stanford University - Department of Economics

Date Written: November 2, 2021

Abstract

I introduce a favor exchange model that allows players to rely on multiple partners to obtain favors i.e., cooperation is substitutable) and study bilateral enforcement of cooperation. Without substitutability, there is either no cooperation or universal cooperation, while under substitutability, each additional relationship is less valuable than the previous one and intermediate levels of cooperation are observed. I extend the model to allow for transfers, heterogeneous players and community enforcement and compare different forms of enforcement. My results can explain the stratification of social networks in Post-Soviet states and the adoption of different enforcement mechanisms by medieval traders.

Keywords: networks, reciprocity, bilateral enforcement, cooperation

JEL Classification: D85

Suggested Citation

Celebi, Oguzhan, Substitutability in Cooperation and Bilateral Enforcement (November 2, 2021). Available at SSRN: https://ssrn.com/abstract=3954576 or http://dx.doi.org/10.2139/ssrn.3954576

Oguzhan Celebi (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
STANFORD, CA 94305-6072
United States

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