Social Norms and Trust among Strangers
We study the development of a social norm of trust and reciprocity among strangers in the infinitely repeated binary trust games. Players are anonymous and interact at randomly determined times. Following Kandori (1992), we show that the social norm of trust and reciprocity can be sustained in a sequential equilibrium when self-interested community members employ the contagious strategy. In order to provide the investors with proper incentives to follow the contagious strategy, the sufficient condition requires that there should exist an outside option for the investors and the payoff from the outside option should converge to the payoff from trust and reciprocity when the community size goes to infinity. We further show that this sufficient condition is also a necessary condition to sustain any sequential equilibrium in which the trustees employ the contagious strategy. Our results imply that the extension of the contagious equilibrium from the Prisoner's dilemma game to other classes of games such as trust game is very limited.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Sep 2008|
|Date of revision:||May 2011|
|Contact details of provider:|| Postal: 1455, de Maisonneuve Blvd, Montréal, Québec, H3G 1M8|
Phone: (514) 848-3900
Fax: (514) 848-4536
Web page: http://economics.concordia.ca
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John Duffy & Jack Ochs, 2004.
"Cooperative Behavior and the Frequency of Social Interaction,"
Levine's Working Paper Archive
122247000000000060, David K. Levine.
- Duffy, John & Ochs, Jack, 2009. "Cooperative behavior and the frequency of social interaction," Games and Economic Behavior, Elsevier, vol. 66(2), pages 785-812, July.
- John Duffy & Jack Ochs, 2004. "Cooperative Behavior and the Frequency of Social Interaction," Levine's Bibliography 122247000000000108, UCLA Department of Economics.
- Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-554, May.
- David M Kreps & Robert Wilson, 2003.
Levine's Working Paper Archive
618897000000000813, David K. Levine.
- Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-548, June.
- 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.
- Tirole, Jean, 1994.
""A Theory of Collective Reputations" with Applications to the Persistence of Corruption and to Firm Quality,"
IDEI Working Papers
38, Institut d'Économie Industrielle (IDEI), Toulouse.
- Jean Tirole, 1996. "A Theory of Collective Reputations (with applications to the persistence of corruption and to firm quality)," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 1-22.
- Tirole, J., 1993. "A Theory of Collective Reputations with Applications to the Persistence of Corruption and to Firm Quality," Working papers 93-13, Massachusetts Institute of Technology (MIT), Department of Economics.
- Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
- Parikshit Ghosh & Debraj Ray, 1995.
"Cooperation in Community Interaction Without Information Flows,"
Boston University - Institute for Economic Development
64, Boston University, Institute for Economic Development.
- Parikshit Ghosh & Debraj Ray, 1996. "Cooperation in Community Interaction Without Information Flows," Review of Economic Studies, Oxford University Press, vol. 63(3), pages 491-519.
- Okuno-Fujiwara Masahiro & Postlewaite Andrew, 1995. "Social Norms and Random Matching Games," Games and Economic Behavior, Elsevier, vol. 9(1), pages 79-109, April.
- Michihiro Kandori, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 63-80.
- Glenn Ellison, 1994. "Cooperation in the Prisoner's Dilemma with Anonymous Random Matching," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 567-588.
When requesting a correction, please mention this item's handle: RePEc:crd:wpaper:08006. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Economics Department)
If references are entirely missing, you can add them using this form.