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Group Reputations, Stereotypes, and Cooperation in a Repeated Labor Market

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In a world of incomplete, unenforceable contracts, both reputation effects and fairness concerns have been suggested as mechanisms capable of avoiding or mitigating market failure. Existing experiments show that labor market failure can be avoided in the absence of individual reputations, apparently due to subjects' other-regarding preferences. This paper introduces a reputation equilibrium with stereotyping (modeled as a belief of type correlation) that predicts cooperation even when individual reputations effects are weak. New experiments show that cooperation emerges when such equilibria are likely to exist, but not when existence is unlikely.

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Paper provided by Carnegie Mellon University, Tepper School of Business in its series GSIA Working Papers with number 2006-E6.

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Handle: RePEc:cmu:gsiawp:1140898278

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Postal: Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890
Web page: http://www.tepper.cmu.edu/

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Web: http://student-3k.tepper.cmu.edu/gsiadoc/GSIA_WP.asp

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Citations

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Cited by:
  1. Fischbacher, Urs & Gächter, Simon & Quercia, Simone, 2012. "The behavioral validity of the strategy method in public good experiments," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 897-913.
  2. Charness, Gary & Kuhn, Peter J., 2010. "Lab Labor: What Can Labor Economists Learn from the Lab?," IZA Discussion Papers 4941, Institute for the Study of Labor (IZA).
  3. repec:cge:warwcg:52 is not listed on IDEAS
  4. Chen, Yan & Li, Sherry Xin & Liu, Tracy Xiao & Shih, Margaret, 2014. "Which hat to wear? Impact of natural identities on coordination and cooperation," Games and Economic Behavior, Elsevier, vol. 84(C), pages 58-86.
  5. David Cooper & E. Dutcher, 2011. "The dynamics of responder behavior in ultimatum games: a meta-study," Experimental Economics, Springer, vol. 14(4), pages 519-546, November.
  6. John Duffy & Felix Munoz-Garcia, 2012. "Cooperation and Signaling with Uncertain Social Preferences," Working Papers 491, University of Pittsburgh, Department of Economics, revised May 2013.
  7. Gabriele Camera & Marco Casari, 2009. "Cooperation among Strangers under the Shadow of the Future," American Economic Review, American Economic Association, vol. 99(3), pages 979-1005, June.
  8. John Duffy & Felix Munoz-Garcia, 2009. "Patience or Fairness? Analyzing Social Preferences in Repeated Games," Working Papers 2009-12, School of Economic Sciences, Washington State University.
  9. Sheremeta, Roman M. & Wu, Steven Y., 2012. "Testing Canonical Tournament Theory: On the Impact of Risk, Social Preferences and Utility Structure," IZA Discussion Papers 6304, Institute for the Study of Labor (IZA).
  10. Gabriele Camera & Marco Casari, 2007. "Cooperation among strangers: an experiment with indefinite interaction," Purdue University Economics Working Papers 1201, Purdue University, Department of Economics.
  11. Bornhorst, Fabian & Ichino, Andrea & Kirchkamp, Oliver & Schlag, Karl & Winter, Eyal, 2010. "Similarities and Differences when Building Trust: the Role of Cultures," CEPR Discussion Papers 7717, C.E.P.R. Discussion Papers.
  12. David Hugh-Jones & Ro’i Zultan, 2013. "Reputation and Cooperation in Defense," Journal of Conflict Resolution, Peace Science Society (International), vol. 57(2), pages 327-355, April.
  13. Roe, Brian E. & Wu, Steven Y., 2009. "Do the Selfish Mimic Cooperators? Experimental Evidence from Finitely-Repeated Labor Markets," IZA Discussion Papers 4084, Institute for the Study of Labor (IZA).
  14. MacDonald, James M. & Wu, Steven Y., 2009. "Market Competition, Institutions, and Contracting Outcomes: Preliminary Model and Experimental Results," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 50625, Agricultural and Applied Economics Association.
  15. Charness, Gary & Du, Ninghua & Yang, Chun-Lei & Yao, Lan, 2013. "Promises in contract design," European Economic Review, Elsevier, vol. 64(C), pages 194-208.

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