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An experimental test of the efficacy of a simple reputation mechanism to solve social dilemmas

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  • Stahl, Dale O.

Abstract

The evolution of cooperation has been the focus of intense research in the social sciences, natural sciences (especially biology), and even computer science. It has long been recognized that the possibility of future consequences is crucial to the emergence of rational cooperation. It was thought that random matching was isomorphic to one-shot play, but Kandori (1992) showed that a reputation labeling mechanism can be used to support cooperation in the random matching Prisoner Dilemma. We designed an experiment to test this result. We found that while the level of cooperation steadily declined without a reputation mechanism, with our color-coded reputation mechanism the level of cooperation steadily increased with experience. An econometric mixture model consisting of four reputation-conditioned strategies as well as a Level-0 type was fitted to the data. We cannot reject the hypothesis that the majority of subjects used one of these strategies and learned with experience.

Suggested Citation

  • Stahl, Dale O., 2013. "An experimental test of the efficacy of a simple reputation mechanism to solve social dilemmas," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 116-124.
    • Handle: RePEc:eee:jeborg:v:94:y:2013:i:c:p:116-124
    DOI: 10.1016/j.jebo.2013.08.014
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    Cited by:

    1. Kamei, Kenju, 2017. "Endogenous reputation formation under the shadow of the future," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 189-204.
    2. Gabriele Camera & Marco Casari, 2018. "Monitoring institutions in indefinitely repeated games," Experimental Economics, Springer;Economic Science Association, vol. 21(3), pages 673-691, September.
    3. Kenju Kamei, 2019. "Cooperation and endogenous repetition in an infinitely repeated social dilemma," International Journal of Game Theory, Springer;Game Theory Society, vol. 48(3), pages 797-834, September.
    4. Ghidoni, Riccardo & Cleave, Blair L. & Suetens, Sigrid, 2019. "Perfect and imperfect strangers in social dilemmas," European Economic Review, Elsevier, vol. 116(C), pages 148-159.
    5. Konstantinos Georgalos & Indrajit Ray & Sonali SenGupta, 2020. "Nash versus coarse correlation," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1178-1204, December.
    6. Gong, Binglin & Yang, Chun-Lei, 2019. "Cooperation through indirect reciprocity: The impact of higher-order history," Games and Economic Behavior, Elsevier, vol. 118(C), pages 316-341.
    7. Kamei, Kenju, 2020. "Voluntary disclosure of information and cooperation in simultaneous-move economic interactions," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 234-246.
    8. Kamei, Kenju & Kobayashi, Hajime & Tse, Tiffany Tsz Kwan, 2022. "Observability of partners’ past play and cooperation: Experimental evidence," Economics Letters, Elsevier, vol. 210(C).
    9. Fehr, Dietmar & Sutter, Matthias, 2019. "Gossip and the efficiency of interactions," Games and Economic Behavior, Elsevier, vol. 113(C), pages 448-460.
    10. Dorothée Honhon & Kyle Hyndman, 2020. "Flexibility and Reputation in Repeated Prisoner’s Dilemma Games," Management Science, INFORMS, vol. 66(11), pages 4998-5014, November.
    11. Kamei, Kenju, 2019. "Cooperation and Endogenous Repetition in an Infinitely Repeated Social Dilemma: Experimental Evidence," MPRA Paper 92097, University Library of Munich, Germany.
    12. Georgalos, Konstantinos & Ray, Indrajit & Gupta, Sonali Sen, 2019. "Nash vs. Coarse Correlation," Cardiff Economics Working Papers E2019/3, Cardiff University, Cardiff Business School, Economics Section.
    13. 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.
    14. Kenju Kamei & Artem Nesterov, 2020. "Endogenous Monitoring through Gossiping in an Infinitely Repeated Prisoner’s Dilemma Game: Experimental Evidence," Working Papers 2020_02, Durham University Business School.
    15. Romero, Julian & Rosokha, Yaroslav, 2018. "Constructing strategies in the indefinitely repeated prisoner’s dilemma game," European Economic Review, Elsevier, vol. 104(C), pages 185-219.
    16. 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.
    17. Zou, Wenbo & Wang, Jinjie & Yan, Jubo, 2022. "Online markets and trust," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 395-412.
    18. Maria Bigoni & Gabriele Camera & Marco Casari, 2019. "Cooperation among strangers with and without a monetary system," Working Papers 19-01, Chapman University, Economic Science Institute.
    19. Weijun Zeng & Minqiang Li & Nan Feng, 2017. "The effects of heterogeneous interaction and risk attitude adaptation on the evolution of cooperation," Journal of Evolutionary Economics, Springer, vol. 27(3), pages 435-459, July.
    20. Kamei, Kenju, 2015. "Endogenous Reputation Formation: Cooperation and Identity under the Shadow of the Future," MPRA Paper 61657, University Library of Munich, Germany.
    21. Krügel, Jan Philipp & Paetzel, Fabian, 2024. "The impact of fraud on reputation systems," Games and Economic Behavior, Elsevier, vol. 144(C), pages 329-354.
    22. Kamei, Kenju, 2020. "The Perverse Costly Signaling Effect on Cooperation under the Shadow of the Future," MPRA Paper 103678, University Library of Munich, Germany.
    23. 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

    Prisoners’ dilemma; Reputation; Experiments;
    All these keywords.

    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
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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