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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.

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File URL: http://www.nek.lu.se/publications/workpap/Papers/WP05_27.pdf
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Bibliographic Info

Paper provided by Lund University, Department of Economics in its series Working Papers with number 2005:27.

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Length: 20 pages
Date of creation: 28 Apr 2005
Date of revision: 04 May 2006
Handle: RePEc:hhs:lunewp:2005_027

Contact details of provider:
Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
Phone: +46 +46 222 0000
Fax: +46 +46 2224613
Web page: http://www.nek.lu.se/
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Related research

Keywords: Cooperation; Prisoners Dilemma; Signaling; Reputation; Altruism; Institutions;

Find related papers by JEL classification:

• C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
• C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

This paper has been announced in the following NEP Reports:

• NEP-ALL-2005-05-07 (All new papers)
• NEP-DCM-2005-05-07 (Discrete Choice Models)
• NEP-EXP-2005-05-07 (Experimental Economics)
• NEP-GTH-2005-05-07 (Game Theory)

References

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