Ko Kuwabara

Do Reputation Systems Undermine Trust?

Abstract:

Past research has shown that external enforcement of cooperation through contracts or sanctions can backfire, undermining intrinsic motivation to cooperate in their absence. The present research examines whether reputation systems might have similar consequences for trust and trustworthiness. Are people less trusting or trustworthy when they step outside of reputation systems? I report results of two web-based experiments comparing the effects of removing reputation systems and contracts on trust (study 1) and trustworthiness (study 2). In both studies, reputation systems were less likely than contracts to undermine cooperation. Moreover, “long” reputations that aggregate over entire transaction histories resulted in higher trust and trustworthiness after removal than “short” reputations that display only the most recent transactions. Theoretically, these results are predicated on reputations as means of sanctioning versus signaling.

Source: Working Paper
Exact Citation:
Kuwabara, Ko. "Do Reputation Systems Undermine Trust?" Working Paper, Columbia Business School, February 14, 2011.
Date: 14 2 2011