The Problem of Cooperation and Reputation Based Choice

Andreas Bergh and Peter Engseld ()

No 2005:27, Working Papers from Lund University, Department of Economics

Abstract: The standard method when analyzing the problem of cooperation using evolutionary game theory is to assume that people are randomly matched against each other in repeated games. In this paper we discuss the implications of allowing agents to have preferences over possible opponents. We model reputation as a noisy observation of actual propensity to cooperate and illustrate how reputation based choice of opponents can explain both the emergence and deterioration of cooperation. We show that empirical and experimental evidence of cooperation is consistent with our hypothesis that people behave so as to minimize the risk of damaging their reputation as nice, cooperative persons.

Keywords: Cooperation; Prisoners Dilemma; Signaling; Reputation; Altruism; Institutions (search for similar items in EconPapers)
JEL-codes: C70 C90 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2005-04-28, Revised 2006-05-04
New Economics Papers: this item is included in nep-dcm, nep-exp and nep-gth
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