Coevolution of trustful buyers and cooperative sellers in the trust game
Naoki Masuda, Mitsuhiro Nakamura

TL;DR
This paper models the trust game in online marketplaces, demonstrating how reputation systems facilitate cooperation between buyers and sellers with fixed roles, even amidst competition and social dilemmas.
Contribution
It introduces a novel analysis of the trust game with role asymmetry and reputation dynamics, extending beyond symmetric models like the donation game.
Findings
Reputation mechanisms enable cooperation under certain conditions.
Cooperative and asocial equilibria can coexist.
Buyers' trust and sellers' reputation-driven cooperation coevolve.
Abstract
Many online marketplaces enjoy great success. Buyers and sellers in successful markets carry out cooperative transactions even if they do not know each other in advance and a moral hazard exists. An indispensable component that enables cooperation in such social dilemma situations is the reputation system. Under the reputation system, a buyer can avoid transacting with a seller with a bad reputation. A transaction in online marketplaces is better modeled by the trust game than other social dilemma games, including the donation game and the prisoner's dilemma. In addition, most individuals participate mostly as buyers or sellers; each individual does not play the two roles with equal probability. Although the reputation mechanism is known to be able to remove the moral hazard in games with asymmetric roles, competition between different strategies and population dynamics of such a game…
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