Abstract

We experimentally study the effects of different types of market experience on the effi- ciency levels attained in a subsequent social dilemma. Our motivation stems from the existence of contrasting views on the potential spillover effects of participation in markets on non-market activities requiring cooperation. In our set-up, market interaction takes place in a continuous double auction involving a short and a long side of the market. This feature represents the very unequal opportunities that exist in some markets. Our focus is on the comparison of the efficiency levels attained in a subsequent social dilemma by pairs of individuals who were on the short side of the market, market-winners, with that of individuals who were on the long side, market-losers. We study both the cases where interaction in the social dilemma is with others from the same market, Market-Partners, and where it is with others from another market, Market-Strangers. We compare the efficiency of cooperation with and without market experience controlling for earnings, allowing us to identify the causal effects of market interaction. The results show that the experience of market interaction has a negative effect on cooperation efficiency in Market-Partners. This holds for both market-losers and market-winners pairs. By con- trast, for Market-Strangers we find the positive effect that market-winner pairs tend to achieve higher cooperation efficiency than in the absence of previous market interaction.