Fairness Emergence in Reputation Systems

Reputation systems have been used to support users in making decisions under uncertainty or risk that is due to the autonomous behavior of others. Research results support the conclusion that reputation systems can protect against exploitation by unfair users, and that they have an impact on the prices and income of users. This observation leads to another question: can reputation systems be used to assure or increase the fairness of resource distribution? This question has a high relevance in social situations where, due to the absence of established authorities or institutions, agents need to rely on mutual trust relations in order to increase fairness of distribution. This question can be formulated as a hypothesis: in reputation (or trust management) systems, fairness should be an emergent property. The notion of fairness can be precisely defined and investigated based on the theory of equity. In this paper, we investigate the Fairness Emergence hypothesis in reputation systems and prove that , under certain conditions, the hypothesis is valid for open and closed systems, even in unstable system states and in the presence of adversaries. Moreover, we investigate the sensitivity of Fairness Emergence and show that an improvement of the reputation system strengthens the emergence of fairness. Our results are confirmed using a trace-driven simulation from a large Internet auction site.Trust, Simulation, Fairness, Equity, Emergence, Reputation System

Do Spouses Cooperate? And If Not: Why?

Models of household economics require an understanding of economic interactions in families. Social ties, repetition and reduced strategic uncertainty make social dilemmas in couples a very special case that needs to be empirically studied. In this paper we present results from a large economic experiment with 100 maritally living couples. Participants made decisions in a social dilemma with their partner and with a stranger. We predict behavior in this task with individual and couples' socio-demographic variables, efficiency preferences and couples' marital satisfaction. As opposed to models explaining behavior amongst strangers, the regressions on couples’ decisions highlight clear patterns concerning cooperation behavior which could inspire future household decision-making models.Noncooperative Games; Laboratory, Individual Behavior; Household Production and Intra-household Allocation

An Economic Analysis of the Potential for Coercion in Consent Solicitations for Bonds

This Article examines why issuers frequently cannot present bondholders with an offer that draws on collective action problems to force the acceptance of the offer by the bondholders. The analysis is restricted to publicly offered bonds. For a number of reasons, privately placed debt presents fewer opportunities for coercion. A prior business relationship among various purchasers, which facilitates cooperation, may be more likely with respect to privately placed debt. Privately placed debt often has more significant protection for the bondholders than public debt with the same level of seniorit

Bargaining and Influence in Conflict Situations

[Excerpt] This chapter examines bargaining as an influence process through which actors attempt to resolve a social conflict. Conflict occurs when two or more interdependent actors have incompatible preferences and perceive or anticipate resistance from each other (Blalock 1989; Kriesberg 1982). Bargaining is a basic form of goal-directed action that involves both intentions to influence and efforts by each actor to carry out these intentions. Tactics are verbal and/or nonverbal actions designed to maneuver oneself into a favorable position vis-a-vis another or to reach some accommodation. Our treatment of bargaining subsumes the concept of negotiation (see Morley and Stephenson 1977). This chapter is organized around a conceptual framework that distinguishes basic types of bargaining contexts. We begin by introducing the framework and then present an overview of and analyze theoretical and empirical work on each type of bargaining context

An Experimental Investigation of Fairness and Reciprocal Behavior in a Triangular Principal'-Multiagent Relationship.

A laboratory investigation of a simple agency model that allow to study how the principal's fairness affects the attitude towards cooperation between two interdependent agents performing a simple production task.principal-agent theory; prisoner's dilemma; reciprocity; fairness; experimental economics

Cooperation in Symmetric and Asymmetric Prisoner's Dilemma Games

We experimentally study the effect of asymmetry on cooperation in a 40 period prisoner's dilemma game in fixed partner design. We distinguish between a high and low payoff symmetric prisoner's dilemma and an asymmetric game combined out of both symmetric ones. Asymmetry significantly decreases cooperation, as low-type players are more likely to defect after mutual cooperation while high-type players initiate cooperation more often than the former. Asymmetry also has a significant negative effect on the stability of cooperation rendering long sequences of mutual cooperation extremely rare.Symmetry, Asymmetry, Prisoner's Dilemma, Experiments

Unstable Coalitions: Corporate Governance as a Multi-Player Game

This is an article written in honor of Professor Donald Schwartz, a leading figure in academic corporate law for over two decades, but also a man nearly unique in his willingness to move beyond corporate law to the general study of corporate behavior. In this light, this article will not explore the latest wrinkle in the law – the most recent case, latest SEC ruling, or newest takeover defense tactic – but will instead ask if there are new ways in which we should try to talk about corporate law and corporate behavior. These were questions that Don Schwartz repeatedly asked himself and others, and this article is a modest attempt to respond by suggesting a different framework within which we can better understand institutional bargaining inside the corporation. Let me begin by describing the prevailing orthodoxy. Scholars of both law and economics have tended to view corporate governance as largely a principal/agent relationship. Under this view, shareholders are the principals; management, the agents. While standard economic theory today describes the corporation as a series of bargains or nexus of contracts in which additional interest groups – creditors, employees, suppliers, etc. – also participate, it still assumes that these other actors will not seek to participate in governance decisions. Under the neoclassical view, efficiency dictates that only the firm\u27s residual claimants – its shareholders – should have voting rights. As a result, corporate governance (although not the broader topic of corporate contracting) essentially boils down to the principal/agent relationship between shareholders and managers. So viewed, the law\u27s role becomes that of reducing the agency costs that shareholders must incur to hold management faithful to their interests. The thesis of this article is that this bilateral model of corporate governance oversimplifies, basically because it leaves out an essential third player: stakeholders. Although stakeholders have not in the past sought to participate in corporate governance, this pattern is changing – only recently, to be sure, but very rapidly in some sectors of the economy. In some cases, the motor force driving this change may be the failure of an earlier system of implicit contracting; in other cases, it may be an exogenous change (such as the development of junk bonds) that revealed the inadequacy of existing contractual protections and left stakeholders exposed to new risks. In response, new contractual protections have been designed to protect some stakeholders, but other stakeholders have sought instead to participate in governance decisions. The key transition, however, is the formation of coalitions – sometimes between management and stakeholders to resist shareholder pressures and sometimes between stakeholders and shareholders to oust management. The central concern of this article will be where this transition is leading. Arguably, the public corporation should be viewed less as a series of bargains than as a series of coalitions. Compared to bargains, coalitions are less stable, less enforceable, and less predictable. While the nexus of contracts paradigm conveys, at least rhetorically, the view that the relationships among those interacting within the corporation are fixed and enforceable, the reality may be that these relationships are more fluid and transitional, with outcomes determined less on the basis of legal rights than through coalition politics