Variable Temptations and Black Mark Reputations
Christina Aperjis,
Yali Miao and
Richard Zeckhauser
Additional contact information
Christina Aperjis: HP Labs, Palo Alto, CA
Yali Miao: Jane Street Capital, Tokyo
Working Paper Series from Harvard University, John F. Kennedy School of Government
Abstract:
In a world of imperfect information, reputations often guide the sequential decisions to trust and to reward trust. We consider two-player situations, where the players meet but once. One player--the truster--decides whether to trust, and the other player--the temptee--has a temptation to betray when trusted. The strength of the temptation to betray may vary from encounter to encounter, and is independently distributed over time and across temptees. We refer to a recorded betrayal as a black mark. We study how trusters and temptees interact in equilibrium when past influences current play only through its effect on certain summary statistics. We first focus on the case that players only condition on the number of black marks of a temptee and study the different equilibria that emerge, depending on whether the trusters, the temptees, or a social planner has the ability to specify the equilibrium. We then show that conditioning on the number of interactions as well as on the number of black marks does not prolong trust beyond black marks alone. Finally, we consider more general summary statistics of a temptee's past and identify conditions under which there exist equilibria where trust is possibly suspended only temporarily.
Date: 2012-11
New Economics Papers: this item is included in nep-exp, nep-mic and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://research.hks.harvard.edu/publications/work ... ?PubId=8676&type=WPN
Related works:
Journal Article: Variable temptations and black mark reputations (2014) 
Working Paper: Variable Temptations and Black Mark Reputations (2012) 
Working Paper: Variable Temptations and Black Market Reputations (2011) 
Working Paper: Variable Temptations and Black Mark Reputations (2011) 
Working Paper: Variable Temptations and Black Mark Reputations (2010) 
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:ecl:harjfk:rwp12-055
Access Statistics for this paper
More papers in Working Paper Series from Harvard University, John F. Kennedy School of Government Contact information at EDIRC.
Bibliographic data for series maintained by ().