Reputation Transmission Without Benefit to the Reporter: A Behavioral Underpinning of Markets in Experimental Focus
15 Pages Posted: 5 Dec 2017
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Reputation Transmission Without Benefit to the Reporter: A Behavioral Underpinning of Markets in Experimental Focus
Date Written: January 2018
Abstract
Reputation is a commonly cited check on opportunism, but it is often unclear what motivates an agent to report another's behavior when it is easy for the aggrieved individual to move on. In a sharply focused laboratory experiment, we find that many cooperators pay to report a defecting partner without the possibility of pecuniary benefit when this has the potential to deprive the latter of future gains and to help his next partner. We illustrate how a social preference can explain such costly reporting, and also discuss evidence for a role of emotions.
JEL Classification: C91, D03, D63
Suggested Citation: Suggested Citation