Group reputations: An experimental foray
AbstractOften information structures are such that while individual reputation building is impossible groups of agents would have the opportunity of building up a reputation. We experimentally examine whether groups of sellers in markets that suffer from moral hazard are able to build up reputations and, thus, avoid market breakdown. We contrast our findings with situations where sellers alternatively can build up an individual reputation or where there are no possibilities for reputation building at all. Our results offer a comparatively optimistic outlook on group reputations as long as groups are small. Even though sellers only receive some of the reputation benefits of withstanding short-run incentives to exploit trust, they are able to overcome the dilemma and successfully exploit the information structure. However, the ability to build successful group reputations depends on group size with trust breaking down in larger groups.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Behavior & Organization.
Volume (Year): 73 (2010)
Issue (Month): 2 (February)
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Web page: http://www.elsevier.com/locate/jebo
Trust Group reputations Moral hazard Information conditions;
Other versions of this item:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
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