Does voluntary disclosure of past behaviors improves cooperation in a dilemma situation?

What is it about?

Endogenously disclosed information improves cooperation under certain conditions in dilemma interactions. However, not everyone discloses, even if disclosure is free, and the masked individuals then behave uncooperatively. Such harmful hiding and uncooperative behaviors are strong under random matching (i.e., when disclosers are not assured to be matched with like-minded disclosers). A control treatment with mandatory disclosure reveals that people are able to sustain high cooperation norms if they are all forced to reveal their past actions. In sum, mandatory disclosure can be a more efficient mechanism than voluntary disclosure for reviews on online platforms. The paper reports the detailed analysis of individuals' disclosure and cooperation behaviors.

Featured Image

Why is it important?

While economists have recently begun to study people's possible endogenous formation of reputational information in several formats, it remains unclear how the market would look if users could voluntarily disclose their reputations (rating scores, past behaviors). A voluntary disclosure system may be theoretically similar to a mandatory disclosure system if ‘rational’ cooperation occurs as discussed in Kreps et al. (1982). However, this study shows that individuals’ hiding and uncooperative behaviors may be liable to precipitate a collapse in the community norms under voluntary disclosure.