Abstract: | ![]() Labor-managed firms often depend on voluntary cooperation to generate efficient levels of labor input. This paper shows how cooperation in Prisoner's Dilemma-like situations can be an equilibrium outcome, when rational individuals act so as to preserve reputations for cooperating. The theory developed here implies that (a) voluntary cooperation will be negatively related to population turnover, and (b) the relationship of community size to voluntary cooperation will have an inverted-U shape. |