Variable Temptations And Black Mark Reputations

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Executive Summary

In a world of imperfect information, reputations often guide the sequential decisions to trust and to reward trust. The authors consider two-player situations, where the trusted player, called the tempter, has a temptation to betray. The strength of the temptation to betray varies from encounter to encounter. They set aside any information about types and examine how reputations work when the tempters are the same in terms of morals and self control. They refer to a recorded betrayal as a black mark and focus on mechanisms that only reveal the number of black marks of a tempter.

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