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Share the Fame or Share the Blame? The Reputational Implications of Partnerships

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Author Info
Costa, Luis Almeida e
Vasconcelos, Luis
Abstract

We use an adverse selection model to study the dynamics of ?rms?reputations when ?rms implement joint projects. We show that in contrast with projects implemented by a single ?rm, in the case of joint projects a ?rm?s reputation does not necessarily increase following a success and does not necessarily decrease following a failure. We also study how reputation considerations a¤ect ?rms? decisions to participate in joint projects. We show that a high quality partner may not be preferable to a low quality partner, and that a high reputation partner is not necessarily preferable to a low reputation partner. JEL codes: L14, L15, L24, D82, D85

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Paper provided by Universidade Nova de Lisboa, Faculdade de Economia in its series FEUNL Working Paper Series with number wp539.

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Length: 39 pages
Date of creation: 2008
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Handle: RePEc:unl:unlfep:wp539

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Quinzii, Martine & Rochet, Jean-Charles, 1985. "Multidimensional signalling," Journal of Mathematical Economics, Elsevier, vol. 14(3), pages 261-284, June. [Downloadable!] (restricted)
  2. Axel Anderson & Lones Smith, 2006. "Assortative Matching and Reputation," Cowles Foundation Discussion Papers 1553, Cowles Foundation, Yale University. [Downloadable!]
  3. Steven Tadelis, 1999. "What's in a Name? Reputation as a Tradeable Asset," American Economic Review, American Economic Association, vol. 89(3), pages 548-563, June. [Downloadable!] (restricted)
    Other versions:
  4. Johannes Horner, 2002. "Reputation and Competition," American Economic Review, American Economic Association, vol. 92(3), pages 644-663, June. [Downloadable!]
  5. Segendorff, Björn, 2000. "A Signalling Theory of Scapegoats," Working Paper Series in Economics and Finance 406, Stockholm School of Economics. [Downloadable!]
  6. Cabral, L.M.B., 2000. "Stretching Firm and Brand Reputation," New York University, Leonard N. Stern School Finance Department Working Paper Seires 00-07, New York University, Leonard N. Stern School of Business-.
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  7. Birger Wernerfelt, 1988. "Umbrella Branding as a Signal of New Product Quality: An Example of Signalling by Posting a Bond," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 458-466, Autumn. [Downloadable!] (restricted)
  8. Steven Tadelis, 2002. "The Market for Reputations as an Incentive Mechanism," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 854-882, August. [Downloadable!] (restricted)
  9. Jean-Charles Rochet & Philippe Chone, 1998. "Ironing, Sweeping, and Multidimensional Screening," Econometrica, Econometric Society, vol. 66(4), pages 783-826, July.
  10. Günther Lang, 2003. "Reputation deals: A theory of endogenous teams," Atlantic Economic Journal, International Atlantic Economic Society, vol. 31(1), pages 32-50, March. [Downloadable!] (restricted)
  11. Alan Morrison & William J. Wilhelm, Jr., 2003. "Partnership Firms, Reputation and Human Capital," OFRC Working Papers Series 2003fe02, Oxford Financial Research Centre. [Downloadable!]
  12. Alan D. Morrison & William J. Wilhelm, 2004. "Partnership Firms, Reputation, and Human Capital," American Economic Review, American Economic Association, vol. 94(5), pages 1682-1692, December. [Downloadable!]
  13. Mailath, George J & Samuelson, Larry, 2001. "Who Wants a Good Reputation?," Review of Economic Studies, Blackwell Publishing, vol. 68(2), pages 415-41, April.
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  14. Hendrik Hakenes & Martin Peitz, 2007. "Observable Reputation Trading," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 693-730, 05. [Downloadable!] (restricted)
    Other versions:
    • Hendrik Hakenes & Martin Peitz, 2006. "Observable Reputation Trading," Discussion Papers 131, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  15. Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, vol. 27(2), pages 280-312, August. [Downloadable!] (restricted)
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  16. Shapiro, Carl, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, MIT Press, vol. 98(4), pages 659-79, November. [Downloadable!] (restricted)
  17. Wilson, Robert, 1985. "Multi-dimensional signalling," Economics Letters, Elsevier, vol. 19(1), pages 17-21. [Downloadable!] (restricted)
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  1. Enrico Sette, 2009. "Sorting, reputation and entry in a market for experts," Temi di discussione (Economic working papers) 727, Bank of Italy, Economic Research Department. [Downloadable!]
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