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Second-order beliefs in reputation systems with endogenous evaluations – an experimental study

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  • Greiff, Matthias
  • Paetzel, Fabian

Abstract

We investigate a repeated public good game with group size two and stranger matching. Contributions are public information and each participant evaluates her partner's contribution. At the beginning of each period, participants receive information regarding the evaluation of the previous period. Evaluations are subjective judgments, hence our reputation system allows for some degree of noise. There are two information treatments: Each participant receives information either about her partner's evaluation, or about her own and her partner's evaluation. The results show that although participants condition their contributions on their partners' evaluations, this information alone is insufficient to raise contributions. Only if participants also know their own evaluations, we find an increase in contributions.

Suggested Citation

  • Greiff, Matthias & Paetzel, Fabian, 2016. "Second-order beliefs in reputation systems with endogenous evaluations – an experimental study," Games and Economic Behavior, Elsevier, vol. 97(C), pages 32-43.
    • Handle: RePEc:eee:gamebe:v:97:y:2016:i:c:p:32-43
    DOI: 10.1016/j.geb.2016.02.009
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    Cited by:

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    3. Greiff, Matthias & Paetzel, Fabian, 2020. "Information about average evaluations spurs cooperation: An experiment on noisy reputation systems," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 334-356.
    4. Zou, Wenbo & Wang, Jinjie & Yan, Jubo, 2022. "Online markets and trust," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 395-412.
    5. Lv, Ran & Qian, Jia-Li & Hao, Qing-Yi & Wu, Chao-Yun & Guo, Ning & Ling, Xiang, 2024. "The impact of reputation-based heterogeneous evaluation and learning on cooperation in spatial public goods game," Chaos, Solitons & Fractals, Elsevier, vol. 181(C).
    6. Steven J. Bosworth, 2017. "The importance of higher-order beliefs to successful coordination," Experimental Economics, Springer;Economic Science Association, vol. 20(1), pages 237-258, March.
    7. Krügel, Jan Philipp & Paetzel, Fabian, 2024. "The impact of fraud on reputation systems," Games and Economic Behavior, Elsevier, vol. 144(C), pages 329-354.
    8. Krügel, Jan Philipp & Paetzel, Fabian, 2021. "The Impact of Fake Reviews on Reputation Systems and Efficiency," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242415, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    Conditional cooperation; Endogenous evaluations; Indirect reciprocity; Noisy reputation; Second-order beliefs;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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