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Allie Wilkinson - Jun 17, 2013 3:37 pm UTC

Cooperation occurs when we act on behalf of a common benefit, often at personal cost. Everyone would be better off if an entire group cooperates, but some individual members can do better if they go it alone, so self-interest undermines cooperation. A new study indicates that your reputation—in terms of whether people are aware that you're cooperating—plays a pivotal role in your decision to cooperate.

Studies on the evolution of cooperation, or how cooperation can emerge and persist, use the Prisoner’s Dilemma as the standard example to demonstrate why people may choose not to cooperate. In the Prisoner’s Dilemma, two men are arrested and held in separate cells. Due to a lack of evidence, the prosecution plans to sentence each man to year in prison on a lesser charge. If either suspect testifies against his partner, he will go free, while his partner will be sentenced to three years in prison; if both men testify against each other, then they will each serve two years. Each man is better off if he cooperates.

The Prisoner’s Dilemma is an example of direct reciprocity, where two individuals affect one another's fate. But cooperation can also be based on indirect reciprocity, which is centered on repeated encounters between a group of individuals. In a sense, it’s the karmic approach—the belief that your good deeds toward others will come full-circle, and someone will eventually scratch your back.

A crucial aspect of both forms of cooperation is reputation. Being noticed for your actions is key to cooperation because it shows others that you're trustworthy. Perhaps as a result, people are more cooperative when their decisions are observable by others. While theoretical work and small-scale experiments have been done to look at how observability promotes cooperation, little work has been done on a large scale or in real-world settings.

To investigate the power that reputation plays in cooperation, scientists conducted a large-scale field experiment in collaboration with the Pacific Gas and Electric Company (PG&E), a utility that operates the majority of Northern California’s residential electricity market. The experiment was incorporated into a routine marketing effort for PG&E’s SmartAC program, a voluntary demand-response program designed to help prevent or shorten blackouts by reducing air conditioning use on days with unusually high demand. By participating in the program, residents contribute to a public good and benefit from the stability of the electrical grid statewide.

Mailers were sent to residents of 15 homeowners associations, asking them to participate in the SmartAC program, and sign-up sheets were posted in communal areas such as shared mailbox kiosks. The researchers varied whether residents signed up using their name or a unique identifying number.

Residents who signed up using their name, and thus were able to be observed for their good deeds, were nearly three times as likely to participate in the program as those who signed up with the unique identifying number. The potential reputation boost even outweighed cold, hard cash; named sign-ups yielded seven times more participation than the $25 incentive previously offered by PG&E.

The effect of observed cooperation was also larger in settings where residents were more likely to have future interactions with those observing them. Residents of apartment buildings (who are more likely to see their neighbors in public spaces) and homeowners (who are likely to be more invested in relationships with their neighbors) were more likely to participate than renters.

As it turns out, what the neighbors think matters. Who knew gossip could be good?

PNAS, 2013. DOI: 10.1073/pnas.1301210110  (About DOIs).

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