UC Riverside

Bilateral conflicts, e.g., common pool resource allocation, pollution prevention, collusion of markets, or share transboundary water, often involve more than one issue that requires solution. The theoretical literature suggests that linking conflictive issues opens new opportunities for cooperation. We present a new experimental setting of bilateral conflicts, in which each issue is modeled as a separate Prisoner's Dilemma game. In two experiments, the effect of issue-linkage on cooperation is evaluated by comparing a treatment in which the two games are played sequentially (isolated treatment) with one where they are played simultaneously (linked treatment). Specifically, in the linked treatment each agent observes the payoffs from playing the different paths across games (e.g., cooperate in game1 but defect in game2) and then acts accordingly by committing to one of these paths. We differentiate the case where issue linkage implies symmetrical payoffs across games (Experiment 1), from the asymmetric case where one agent receives higher benefits from issue-linkage (Experiment 2). We find that issue linkage increases mutual cooperation and decreases mutual defection. Asymmetry reduces the level of cooperation in both isolated and linked games, yet issue linkage facilitates cooperation even when payoffs are asymmetric.