Dishonesty of cheap reputation signaling in indirect reciprocity

In systems of indirect reciprocity, it is important to be seen as a good person. People tend to signal their cooperative intentions after having behaved in an ostensibly uncooperative manner—refusing to help a bad person (justified defection) or accidentally defecting when they intended to cooperate (implementation error). According to a model of reputation signaling in the context of indirect reciprocity, the honesty of reputation signals is not guaranteed if signals are not sufficiently costly. To test this prediction empirically, this study had 198 Japanese adults play the giving game with the additional option of turning on a light on the experimental display (no explicit explanation of the light was provided). When it was costly to turn on the light (costly signal condition), participants tended to turn it on after justified defections and implementation errors. However, when it was not costly (non-costly signal condition), participants tended to turn it on regardless of the justifiability of their defections. The light was therefore more likely to serve as an honest signal of defectors' intentions in the costly signal condition than in the non-costly signal condition. These results suggest that the availability of cheap reputation signals undermines the honesty of reputation systems.