Secret Santa:Anonymity, Signaling, and Conditional Cooperation

Costly signaling of commitment to a group has been proposed as an explanation forparticipation in religion and ritual. But if the signal’s cost is too small, freeriders willsend the signal and behave selfishly later. Effective signaling may then be prohibitivelycostly. If the average level of signaling in a group is observable, but individual effortis not, then freeriders can behave selfishly without being detected, and group memberswill learn about the average level of commitment among the group. We develop a formalmodel, and give examples of institutions that enable anonymous signaling, includingritual, religion, music and dance, voting, charitable donations, and military institutions.We explore the value of anonymity in the laboratory with a repeated two-stage publicgoods game with exclusion. When first-stage contributions are anonymous, subjects arebetter at predicting second-stage behavior, and maintain a substantially higher level ofcooperation.