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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Paper provided by Lund University, Department of Economics in its series Working Papers with number
2005:27.
Length: 20 pages Date of creation: 28 Apr 2005 Date of revision:
04 May 2006 Handle: RePEc:hhs:lunewp:2005_027
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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
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Todd L. Cherry & Peter Frykblom & Jason F. Shogren, 2002.
"Hardnose the Dictator,"
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[Downloadable!]
Other versions:
Todd L. Cherry & Peter Frykblom & Jason F. Shogren, 2002.
"Hardnose the Dictator,"
Working Papers
02-06, Department of Economics, Appalachian State University.
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