Weaponized reputation: Experimental evidence on the misuse of coordinated punishments

This paper experimentally studies how coordinated punishment can be misused. In a repeated trust game with public reputation, we compare a silent commitment treatment, where Agents privately choose a review threshold (the minimum payment required for a positive review), with a public commitment treatment, where the review threshold is observable before Principals choose payments. Public commitment significantly reduces cooperation: effort and payments fall relative to silent commitment. Public commitment also turns posted review thresholds into more enforceable demands: Principals are substantially more likely to meet visible thresholds. Successful zero-effort extraction, in which an Agent exerts no effort but sets a positive review threshold met by the Principal’s payment, is significantly more frequent under public commitment. Coordinated punishments can therefore discipline misconduct, but may also create tools for extortion.