The Role of Signals, Forgiveness, and Reputation for Cooperation (FORGIVE)

The project analyzes how forgiving behavior shapes cooperation in social dilemma settings in which reciprocity is the primary sustaining mechanism. In such environments, individuals rely on signals about others’ behavior to form reputations and guide expectations about future in-teractions. Sustained cooperation depends on rewarding cooperative behavior, punishing de-fections, and restoring relationships after conflict. To study these mechanisms, the project comprised three laboratory experiments with 56 sessions and 860 participants. The experi-ments examine how cooperation emerges under different forms of reciprocity and monitoring. In contrast to much of the literature, particular emphasis was placed on leniency and for-giveness, especially on whether individuals sanction defections immediately and whether co-operation can be restored after retaliation. The first experiment uses an infinitely repeated prisoner’s dilemma with imperfect monitoring, in which signals about a co-player’s behavior can differ from actual actions. Unlike prior work, these discrepancies are endogenous, as participants can deliberately misrepresent their behavior by signaling cooperation while actual-ly defecting. The results show that the possibility of cheating reduces cooperation rates, as many participants engage in misreporting. Forgiveness also declines when cheating is feasi-ble. In the second experiment, we use a more common form of imperfect monitoring, in which false signals are generated by random errors. In this context, we introduce a new set-up in which participants’ histories from earlier supergames are observable in later interactions. We find that participants become more likely to punish defections immediately when such histories are visible, possibly because they do not want to appear exploitable. The third exper-iment focuses on normative evaluations of behavior in the context of indirect reciprocity. The findings indicate that subjects generally view cooperative behavior as good and defective be-havior as bad, regardless of the context of a particular decision. This implies that subjects express limited scope for forgiveness themselves, but also that they do not punish others for being forgiving. Overall, the project shows how signaling, reputation, and forgiveness jointly influence cooperation. The findings advance our understanding of when reciprocity succeeds or fails and provide insights for institutional design under imperfect monitoring and strategic information transmission.