Endogenous Reputation Formation Under the Shadow of the Future

85 Pages Posted: 29 Jan 2015 Last revised: 14 Jul 2017

See all articles by Kenju Kamei

Kenju Kamei

Durham University - Department of Economics and Finance

Date Written: July 10, 2017

Abstract

Recent research has shown that making people’s decisions known to others may enhance cooperation in infinitely repeated prisoner’s dilemma games with random matching. This paper experimentally studies whether people can cooperate with each other by endogenously showing their identities and building cooperative reputations when there is an option to hide the identities. Our experiment shows that a non-negligible fraction of subjects choose to conceal their identities and accordingly subjects fail to cooperate with each other in communities if hiding is cost-free. However, almost all subjects disclose their identities and successfully achieve cooperation if a cost is charged for the act of hiding. This finding has a broad methodological implication for the study of reputation mechanisms when infinitely repeated games are used in an experiment, as people’s behavior may be determined by their ability to hide identities.

Keywords: experiment, cooperation, prisoner dilemma game, infinitely-repeated games, reputation

JEL Classification: C73, C92, D70

Suggested Citation

Kamei, Kenju, Endogenous Reputation Formation Under the Shadow of the Future (July 10, 2017). Available at SSRN: https://ssrn.com/abstract=2556325 or http://dx.doi.org/10.2139/ssrn.2556325

Kenju Kamei (Contact Author)

Durham University - Department of Economics and Finance ( email )

Durham, DH1 3HY
United Kingdom

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