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Gossip and the Efficiency of Interactions

Author

Listed:
  • Matthias Sutter
  • Dietmar Fehr

Abstract

Human communication in organizations often involves a large amount of gossiping about others. Here we study in an experiment whether gossip affects the efficiency of human interactions. We let subjects play a trust game. Third parties observe a trustee’s behavior and can gossip about it by sending a message to the trustor with whom the observed trustee will be paired (for the first time) in the next round. While messages are non-verifiable and sometimes also incorrect, the possibility of gossip is highly efficiency-increasing compared to a situation without any gossip. In two further control treatments, we show that the mere fact of being observed by third parties cannot explain the efficiency-increasing effect of gossip, and that noisy gossip (where information transmission from third parties to trustors can fail) still increases efficiency, but less so than if information transmission is undisturbed.

Suggested Citation

  • Matthias Sutter & Dietmar Fehr, 2016. "Gossip and the Efficiency of Interactions," Working Papers id:9907, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:9907
    Note: Institutional Papers
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    Cited by:

    1. Greiff, Matthias & Paetzel, Fabian, 2020. "Information about average evaluations spurs cooperation: An experiment on noisy reputation systems," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 334-356.
    2. Fonseca, Miguel A. & Peters, Kim, 2018. "Will any gossip do? Gossip does not need to be perfectly accurate to promote trust," Games and Economic Behavior, Elsevier, vol. 107(C), pages 253-281.
    3. Zou, Wenbo & Wang, Jinjie & Yan, Jubo, 2022. "Online markets and trust," Journal of Economic Behavior & Organization, Elsevier, vol. 201(C), pages 395-412.
    4. Zong, Jichuan & de Jong, Eelke & Qiu, Jianying & Li, Jing, 2025. "Socially appropriate intervention: A cross-country investigation of third-party norm enforcement," China Economic Review, Elsevier, vol. 94(PA).
    5. Campbell, Sandy & Gneezy, Uri, 2024. "Smartphone use decreases trustworthiness of strangers," Journal of Economic Psychology, Elsevier, vol. 102(C).
    6. Jan Majewski & Francesca Giardini, 2025. "Realistic gossip in Trust Game on networks: the GODS model," Papers 2511.20248, arXiv.org.
    7. Kenju Kamei & Artem Nesterov, 2024. "Endogenous monitoring through voluntary reporting in an infinitely repeated prisoner's dilemma game: experimental evidence," Economica, London School of Economics and Political Science, vol. 91(364), pages 1553-1577, October.

    More about this item

    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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