The Journal of Politics

ARTICLES

Reputation and Cooperation in Voluntary Exchanges: Comparing Local and Central Institutions

T. K. Ahna1, Justin Esareya2 and John T. Scholza3

a1 Korea University

a2 Emory University

a3 Florida State University

Abstract

Our experimental study compares the effectiveness of three reputation mechanisms believed to enhance cooperation. Groups of 14 subjects repeatedly select partners, play two-person prisoner's dilemmas, and rely only on individual experience to find trustworthy exchange partners in the baseline condition. The local condition represents emergent, bottom-up networks that allow partners to voluntarily share recommendations. The central condition represents designed, top-down institutions that allow wide dissemination of recommendations provided voluntarily. Surprisingly, the greater provision and use of information in the local condition supports the highest level of cooperation, suggesting an unrecognized advantage of exchange networks over centralized institutions in credibility and information provision.

(Received January 07 2008)

(Accepted August 16 2008)

Footnotes

T.K. Ahn is associate professor of public administration, Korea University, Seoul, Korea 136-701.

Justin Esarey is assistant professor of political science, Emory University, Atlanta, GA 30322.

John T. Scholz is Eppes Professor of Political Science, Florida State University, Tallahassee, FL 32306.

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