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REPUTATION TRANSMISSION WITHOUT BENEFIT TO THE REPORTER: A BEHAVIORAL UNDERPINNING OF MARKETS IN EXPERIMENTAL FOCUS
Author(s) -
Kamei Kenju,
Putterman Louis
Publication year - 2018
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12477
Subject(s) - underpinning , reputation , opportunism , preference , economics , microeconomics , focus (optics) , transmission (telecommunications) , business , marketing , public economics , market economy , computer science , engineering , telecommunications , political science , law , civil engineering , physics , optics
Reputation is a commonly cited check on opportunism, but it is often unclear what motivates an agent to report another's behavior when it is easy for the aggrieved individual to move on. In a sharply focused laboratory experiment, we find that many cooperators pay to report a defecting partner without the possibility of pecuniary benefit when this has the potential to deprive the latter of future gains and to help his next partner. We illustrate how a social preference can explain such costly reporting, and also discuss evidence for a role of emotions. ( JEL C91, D03, D63)