Bryan Caplan asked, ‘when doesn’t reputation work well?‘
To me, venereal disease is the most striking response. Unlike other disease, V.D. is simple to prevent: Only have sex with people who credibly show that they aren’t infected. How hard is that? But according to Wikipedia, AIDS alone kills over 2 million people per year.
He suggests this is caused by a demand problem (people are strangely willing to sleep with someone without evidence of their not having VDs) and a supply problem (people who have good reputations can’t take over the whole market), and asks whether there are other areas where reputation fails.
Making good decisions about small risks far in the future while horny is probably a rare skill, but not the only reason for the demand problem I think. Asking someone to credibly show that they aren’t infected credibly shows that you don’t trust them to tell you on their own. Trust is a handy thing to have the appearance of in relationships, but unfortunately requires behaving trustingly. A survey of Texan girls shows 28% of them think they sometimes or never ‘have the right to’ ask their partner if he has been tested for STDs (all the questions in the survey are in terms of ‘rights’ to act certain ways, and I’m not sure what that means, but I guess it implies that asking would detriment their partner unacceptably).
Does this generalize to suggest other areas reputation doesn’t work that well? I think so. Knowing someone’s reputation allows you to trust them more. This means if you want to demonstrate that you trust someone already, something you should not do is visibly seek their reputation. Reputation should work less well then when demonstrating trust is useful and seeking information about reputation is visible.
When else is showing trust useful? Any time in relationships. Sure enough, I could assess a new boyfriend much better if I rung all his exes and got appraisals. But asking for their numbers is awkward. It would make him think I don’t trust his account of himself. Which would usually be entirely sensible of course. Out of earshot we might passionately use gossip and status cues to keep track of reputations, but if you invited your partner to seek reviews of your past behavior from others (as businesses do happily) it would be an implicit accusation of distrust.
Friends are another group to whom showing trust is important. Again, once you are friends with someone, reputation doesn’t work as well as it can in other situations because seeking it out or relying on it suggests distrust, or that you suspect the friendship isn’t enough to ensure the other person behave well. If your friend asks to borrow a book for instance, and you have no previous data on whether they return things, you don’t usually ask them or other friends nearby about their track record. You probably lose the book, but it’s worth it. With friends and lovers, reputation is important for who you get involved with, but once you are involved the need to show trust hinders assessment on smaller issues.
Another area reputation can work poorly is when it is shared as a disorganized commons. Stereotypes can be thought of as reputations attached to identities used by more than one person. Where stereotypes are triggered by a real statistical differences between populations, there is often an externality between those sharing a given reputation. Every time my sister elopes with a butcher’s son, or another woman does well on a math test, or a man from my social class goes to jail, it is not only their reputation which is changed, but incrementally mine too. This might provide useful information about me for onlookers, but the lack of feedback to the person triggering the change means no reason for them to adjust their behavior to take into account the effects on others. For instance had I much concern for my younger brothers’ treatment at high school I might have behaved differently when going through a couple of years before. This should be more of a problem if groups of people become relatively more similar, for instance if many copies exist of one upload they will have bigger interests in the behavior of their reputation sharers. More generally, our keen interest in constructing expectations of others from reputations is presumably a partial cause of whatever problems stereotypes entail.
Reputations can also work well when shared of course. In fact sharing is the only way that reputation does work, though often it is sharing of an identity by many instants of a person, which we do not usually think of as sharing. One person usually does take into account the wellbeing of their future moments to some extent at least. That so many people voluntarily affiliate with groups that lead to others having certain expectations of them is evidence that sharing between people can be great for those involved too. Companies for instance dress their employees the same and encourage shared style and behaviour, in the hope that their brand will be trusted. Because the members of the brand are rewarded or punished according to their effect on the whole company, not just themselves, the externality is removed and there are big gains to be made.