Abstract
In a price-driven, low-bid system a cooperative contract may be helpful in reducing problems that arise from competitive bidding. In this article, the authors examine the stability of cooperation between owners and contractors through a repeated game model with provident partners. Firstly, the profits of defecting and cooperating partners are compared to determine whether there is motivation to defect. This comparison is achieved by using a dynamic model to calculate the loss and recovery of trust. Secondly, the authors examine the relationship between stability and its influential factors under the condition of partner changing. The authors' examination reveals that stability of cooperation correlates negatively with both the recovery velocity of trust and the probability of undiscovered defection, but has a positive correlation with the number of consecutive defections. Furthermore, the possibility of extra profit is the key motivation for unilateral defections under the condition of fixed partners. The authors conclude by proposing methods for maintaining the stability of cooperation.
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