The Emergence of Institutions through Group Reputation Effect:

A Case of Tokyo Managers' Union

Abstract

     The purpose of this article is to clarify the relationship between the emergence of institutions and the dynamics of groups, focusing on the institution for helping in community unions. As previous works pointed out, helping behavior in community unions is the exchanges based on downward indirect reciprocity. Due to the time-gap of this exchange, the maintenance of the helping behavior requires the development and stability of the group. At the beginning of the unions where the members apparently have small incentives, how the institution for cooperation can emerge? On the other hand, we observed protest activity (institution) promote people to join the community unions. Thus we attempt to analyse the interdependence between the emergence of the institution and group dynamics. For this goal, we present a game theoretical model including the dynamically change in group size and the behavior of players, applying“group reputation effect”. This analysis shows that if contribution of players has an important role for increasing in the group size, the initial players have incentives to engage in the volunteer activities (purely other-regarding behavior) for the group.