REPUTATION TRANSMISSION WITHOUT BENEFIT TO THE REPORTER: A BEHAVIORAL UNDERPINNING OF MARKETS IN EXPERIMENTAL FOCUS

Kenju Kamei and Louis Putterman

Economic Inquiry, 2018, vol. 56, issue 1, 158-172

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 C91, D03, D63)

Date: 2018
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https://doi.org/10.1111/ecin.12477

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Working Paper: Reputation Transmission without Benefit to the Reporter: a Behavioral Underpinning of Markets in Experimental Focus (2015)
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