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Consumer networks and firm reputation: A first experimental investigation

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  • Huck, Steffen
  • Lünser, Gabriele K.
  • Tyran, Jean-Robert

Abstract

We examine the role of consumer networks in markets that suffer from moral hazard. Consumers exchange information with neighbors about past experiences with different sellers. Networks foster incentives for reputation building and enhance trust and efficiency in markets.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 108 (2010)
Issue (Month): 2 (August)
Pages: 242-244

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Handle: RePEc:eee:ecolet:v:108:y:2010:i:2:p:242-244

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Web page: http://www.elsevier.com/locate/ecolet

Related research

Keywords: Trust Consumer networks Moral hazard Information conditions Reputation;

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References

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  1. Steffen Huck & Gabriele K. Ruchala & Jean-Robert Tyran, 2006. "Competition Fosters Trust," Discussion Papers 06-22, University of Copenhagen. Department of Economics.
  2. Bohnet, Iris & Croson, Rachel, 2004. "Trust and trustworthiness," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 443-445, December.
  3. Armin Falk, Michael Kosfeld, . "It's all about Connections: Evidence on Network Formation," IEW - Working Papers 146, Institute for Empirical Research in Economics - University of Zurich.
  4. Iris Bohnet & Heike Harmgart & Steffen Huck & Jean-Robert Tyran, 2005. "Learning Trust," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 322-329, 04/05.
  5. Iris Bohnet & Steffen Huck, 2004. "Repetition and Reputation: Implications for Trust and Trustworthiness When Institutions Change," CREMA Working Paper Series 2004-09, Center for Research in Economics, Management and the Arts (CREMA).
  6. Gary E. Bolton & Elena Katok & Axel Ockenfels, 2004. "How Effective Are Electronic Reputation Mechanisms? An Experimental Investigation," Management Science, INFORMS, vol. 50(11), pages 1587-1602, November.
  7. Kosfeld Michael, 2004. "Economic Networks in the Laboratory: A Survey," Review of Network Economics, De Gruyter, vol. 3(1), pages 1-23, March.
  8. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
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Citations

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Cited by:
  1. Dulleck, Uwe & Johnston, David W. & Kerschbamer, Rudolf & Sutter, Matthias, 2012. "The Good, the Bad and the Naive: Do Fair Prices Signal Good Types or Do They Induce Good Behaviour?," IZA Discussion Papers 6491, Institute for the Study of Labor (IZA).
  2. Adrian Beck & Rudolf Kerschbamer & Jianying Qiu & Matthias Sutter, 2010. "Guilt from Promise-Breaking and Trust in Markets for Expert Services - Theory and Experiment," Working Papers 2010-06, Faculty of Economics and Statistics, University of Innsbruck.
  3. Beck, Adrian & Kerschbamer, Rudolf & Qiu, Jianying & Sutter, Matthias, 2013. "Shaping beliefs in experimental markets for expert services: Guilt aversion and the impact of promises and money-burning options," Games and Economic Behavior, Elsevier, vol. 81(C), pages 145-164.
  4. Gaudeul, Alexia & Mathieu, Laurence & Peroni, Chiara, 2008. "Blogs and the Economics of Reciprocal Attention," MPRA Paper 11298, University Library of Munich, Germany.
  5. Loukas Balafoutas & Adrian Beck & Rudolf Kerschbamer & Matthias Sutter, 2014. "The Hidden Costs of Tax Evasion - Collaborative Tax Evasion in Markets for Expert Services," Working Papers 2014-01, Faculty of Economics and Statistics, University of Innsbruck.
  6. Grimm, Veronika & Mengel, Friederike, 2011. "Matching technology and the choice of punishment institutions in a prisoner's dilemma game," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 333-348, May.
  7. Jeanette Brosig & Timo Heinrich, 2011. "Reputation and Mechanism Choice in Procurement Auctions – An Experiment," Ruhr Economic Papers 0254, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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