Cooperation and Reputation in Dynamic Networks: An Experiment

We study the effects of 1) network embeddedness and 2) partner choice on the emergence of cooperation. Previous research suggests that, separately, both mechanisms can influence cooperation. Network embeddedness can promote cooperation through reputation effects, while partner choice allows ostracizing non-cooperative partners. In many social situations, however, both mechanisms are present. Such situations can be characterized as dynamic social networks. It is not yet clear how the combination of these mechanisms affects cooperation; both mutual reinforcement and mutual impediment can be argued.  We address this puzzle by running laboratory experiments in which opportunities for partner choice and network embeddedness are systematically varied, such that the effecst of partner choice and reputation can be compared, both in isolation and combined. Results indicate that the evidence for reputation effects is limited, but that partner choice has a negative impact on cooperation.