Sustaining Group Reputation
Erik Kimbrough and
Jared Rubin
The Journal of Law, Economics, and Organization, 2015, vol. 31, issue 3, 599-628
Abstract:
When individuals trade with strangers, there is a temptation to renege on agreements. If repeated interaction or exogenous enforcement is unavailable, societies often solve this problem via institutions that rely on group, rather than individual, reputation. Groups can employ two mechanisms to uphold reputation that are unavailable to individuals: information sharing and in-group punishment. We design a laboratory experiment to distinguish the roles of these mechanisms when individual reputations are unobservable. Subjects are split into groups and play a trust game with random re-matching, where only the group identity of one’s partner is known. Treatments differ by whether information about group members’ transactions is shared and whether in-group punishment is possible. We find that information sharing encourages path dependence via group reputation: good (bad) behavior results in greater (fewer) gains from exchange in the future. However, the mere threat of in-group punishment is enough to discourage bad behavior. (JEL C9, D02, D7)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (7)
Downloads: (external link)
http://hdl.handle.net/10.1093/jleo/ewu019 (application/pdf)
Access to full text is restricted to subscribers.
Related works:
Working Paper: Sustaining Group Reputation (2013) 
Working Paper: Sustaining Group Reputation (2013) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:oup:jleorg:v:31:y:2015:i:3:p:599-628.
Ordering information: This journal article can be ordered from
https://academic.oup.com/journals
Access Statistics for this article
The Journal of Law, Economics, and Organization is currently edited by Andrea Prat
More articles in The Journal of Law, Economics, and Organization from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().