An Alternative to Reputation Mechanism in Modern Society:
Case Study and Game-Theoretic Analysis on Labor Unions
What mechanism functions in the community unions? In order to solve this puzzle, we made an overlapping generation repeated game with imperfect private monitoring. We found an equilibrium to sustain cooperation that can function well in such organizations. The equilibrium strategy based on interviews to union members mainly has the following feature; a player helps the other player who he has met in the previous helping activity. Due to this feature, every player has an incentive to help cooperative players because he can meet other players who will help him in the next period. Thus this strategy can construct belief-free equilibrium in the private monitoring game. Therefore this belief-free mechanism has potentials to sustain human cooperation in loosely knit organizations in modern society.