Reputation and Cooperation in Voluntary Exchanges: Comparing Local and Central Institutions

16 Pages Posted: 3 Apr 2009

See all articles by T. K. Ahn

T. K. Ahn

Florida State University - Department of Political Science

John T. Scholz

Florida State University - Department of Political Science

Justin Esarey

Emory University - Department of Political Science

Date Written: March 31, 2009

Abstract

Our experimental study compares the effectiveness of three reputation mechanisms believed to enhance cooperation. Groups of 14 subjects repeatedly select partners, play two-person prisoner's dilemmas, and rely only on individual experience to find trustworthy exchange partners in the baseline condition. The local condition represents emergent, bottom-up networks that allow partners to voluntarily share recommendations. The central condition represents designed, top-down institutions that allow wide dissemination of recommendations provided voluntarily. Surprisingly, the greater provision and use of information in the local condition supports the highest level of cooperation, suggesting an unrecognized advantage of exchange networks over centralized institutions in credibility and information provision.

Suggested Citation

Ahn, T. K. and Scholz, John T. and Esarey, Justin, Reputation and Cooperation in Voluntary Exchanges: Comparing Local and Central Institutions (March 31, 2009). Context and the Evolution of Mechanisms for Solving Collective Action Problems Paper. Available at SSRN: https://ssrn.com/abstract=1371304 or http://dx.doi.org/10.2139/ssrn.1371304

T. K. Ahn (Contact Author)

Florida State University - Department of Political Science ( email )

Talahasse, FL 30306
United States
850-644-4540 (Phone)
850-644-4535 (Fax)

John T. Scholz

Florida State University - Department of Political Science ( email )

Talahasse, FL 30306
United States

Justin Esarey

Emory University - Department of Political Science ( email )

Atlanta, GA 30322
United States

HOME PAGE: http://userwww.service.emory.edu/~jesarey/

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