Agreements with reciprocity: Co-financing and MOUs

Jang, Dooseok, Patel, Amrish and Dufwenberg, Martin (2018) Agreements with reciprocity: Co-financing and MOUs. Games and Economic Behavior, 111. pp. 85-99. ISSN 0899-8256

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Abstract

Institutions for co-financing agreements often exist to encourage public good investment. Can such frameworks deliver maximal investment when agents are motivated by reciprocity? We demonstrate that indeed they can, but not how one might expect. If maximal investment is impossible in the absence of the institution and public good returns are high, then an agreement signed by all parties cannot lead to full investment. However, if all parties reject the agreement, then full investment is attainable via a gentlemen's agreement or memorandum of understanding (MOU). Agreement institutions may thus do more than just facilitate the signing of binding agreements; they may play a critical role in igniting informal cooperation underpinned by reciprocity.

Item Type: Article
Uncontrolled Keywords: co-financing agreements,gentlemens' agreements,mous,public goods,reciprocity
Faculty \ School: Faculty of Social Sciences > School of Economics
Depositing User: LivePure Connector
Date Deposited: 14 Jun 2018 12:30
Last Modified: 24 Sep 2022 03:32
URI: https://ueaeprints.uea.ac.uk/id/eprint/67364
DOI: 10.1016/j.geb.2018.06.004

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