The use of reputation in repeated dyadic interactions

Abstract

How cooperation is possible has been one of the major puzzles in social sciences. Traditionally, two mechanisms have been proposed to explain cooperation. Cooperation in repeated dyadic interactions has been explained by direct reciprocity, while cooperation between more than two individuals has been explained by indirect reciprocity. Although reputation is theoretically unnecessary to achieve mutual cooperation in repeated dyadic interactions, several experimental studies indicated that people do make use of reputation even in such situations. Therefore, we conducted two experiments to investigate why people make use of reputation in dyadic interactions. Our results revealed that people use reputation because they assume that reputation enables them to predict their partners’ future behaviors in dyadic interactions. We conclude that there is a need to reexamine the system of mechanisms posited to explain the problem of cooperation in particular by expanding the scope of indirect reciprocity.