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Group Reputations, Stereotypes, and Cooperation in a Repeated Labor Market

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  • Paul J. Healy

Abstract

Reputation effects and other-regarding preferences have both been used to predict cooperative outcomes in markets with inefficient equilibria. Existing reputation-building models require either infinite time horizons or publicly observed identities, but cooperative outcomes have been observed in several moral hazard experiments with finite horizons and anonymous interactions. This paper introduces a full reputation equilibrium (FRE) with stereotyping (perceived type correlation) in which cooperation is predicted in early periods of a finitely repeated market with anonymous interactions. New experiments generate results in line with the FRE prediction, including final-period reversions to stage-game equilibrium and noncooperative play under unfavorable payoff parameters. (JEL C72, C73, C78, J41)

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  • Paul J. Healy, 2007. "Group Reputations, Stereotypes, and Cooperation in a Repeated Labor Market," American Economic Review, American Economic Association, vol. 97(5), pages 1751-1773, December.
    • Handle: RePEc:aea:aecrev:v:97:y:2007:i:5:p:1751-1773
    Note: DOI: 10.1257/aer.97.5.1751
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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