Scarce and directly beneficial reputations support cooperation
ABSTRACTA human solution to the problem of cooperation is the construction and maintenance of informal reputation hierarchies. Reputational information contributes to cooperation by providing guidelines about previous group-beneficial or free-rider behavior of opponents in social dilemma interactions. How reputation information could be credible, however, when outcomes of interactions are not publicly known, remains a puzzle. In this study, we propose that credibility could be ensured if reputation is a scarce resource and it is not believed to be earned for direct benefits. We tested these propositions in a laboratory experiment in which participants played two-person Prisoner’s Dilemma games without partner selection, could observe some other interactions and could communicate reputational information about possible prospective opponents to each other. We found that scarcity is a necessary condition for reputation scores to be informative. While cooperation has not been sustained at a high level in any of the conditions, reputational information clearly influenced cooperation decisions. The possibility of exchanging third-party information was able to increase the level of cooperation the most if reputation was a scarce resource and contrary to our expectations, when reputational scores have been directly translated into monetary benefits.