Informal exchange of information among competitors has been well-documented in a variety of industries, and one's expectation of reciprocity shown to be a key determinant. We use an indeterminate horizon centipede game to establish a feedback loop in the laboratory and show that an individual's beliefs about the recipient's intentions to reciprocate matter more than a recipient's ability to do so. This implies that reducing strategic uncertainty about a competitor's behavior has a stronger effect on information ows than reducing environmental uncertainty (about the competitor's ability). We further show results on the formation of beliefs and discuss managerial implications.
Ganglmair, Bernhard, Alex Holcomb and Noah Myung (2019), Expectations of Reciprocity when Competitors Share Information: Experimental Evidence, ZEW Discussion Paper No. 19-032, Mannheim. Download