Reputation Transmission Without Benefit to the Reporter: A Behavioral Underpinning of Markets in Experimental Focus

43 Pages Posted: 24 Sep 2015

See all articles by Kenju Kamei

Kenju Kamei

Durham University - Department of Economics and Finance

Louis Putterman

Brown University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 8, 2015

Abstract

Reputation is a commonly cited check on opportunism in economic and social interactions. But it is often unclear what would motivate an agent to report another’s behavior when the pool of potential partners is large and it is easy enough for an aggrieved player to move on. We argue that behavioral or social preference motivations may solve this conundrum. In a laboratory experiment in which subjects lack any private material incentive to report partners’ actions, we find that most cooperators incur a cost to report a defecting partner when this has the potential to deprive the latter of future gains and to help his next partner.

Keywords: reputation, prisoners’ dilemma, experiment, punishment, communication, costly reporting, social preference, inequity aversion

JEL Classification: C91, D03, D63

Suggested Citation

Kamei, Kenju and Putterman, Louis G., Reputation Transmission Without Benefit to the Reporter: A Behavioral Underpinning of Markets in Experimental Focus (September 8, 2015). Available at SSRN: https://ssrn.com/abstract=2664606 or http://dx.doi.org/10.2139/ssrn.2664606

Kenju Kamei (Contact Author)

Durham University - Department of Economics and Finance ( email )

Durham, DH1 3HY
United Kingdom

Louis G. Putterman

Brown University - Department of Economics ( email )

Box B
Providence, RI 02912
United States
401-863-3837 (Phone)
401-863-1970 (Fax)

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