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

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  • 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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Bibliographic Info

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
Date of revision:
Handle: RePEc:unl:unlfep:wp539

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  1. Wilson, Robert, 1985. "Multi-dimensional signalling," Economics Letters, Elsevier, vol. 19(1), pages 17-21.
  2. Günther Lang, 2003. "Reputation deals: A theory of endogenous teams," Atlantic Economic Journal, International Atlantic Economic Society, vol. 31(1), pages 32-50, March.
  3. 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.
  4. Mailath, George J & Samuelson, Larry, 2001. "Who Wants a Good Reputation?," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 415-41, April.
  5. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
  6. Miklos-Thal, Jeanine, 2008. "Linking Reputations: The Signaling and Feedback Effects of Umbrella Branding," MPRA Paper 11045, University Library of Munich, Germany.
  7. Segendorff, Björn, 2000. "A Signalling Theory of Scapegoats," Working Paper Series in Economics and Finance 406, Stockholm School of Economics.
  8. 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.
  9. Steve Tadelis, 1997. "What's in a Name? Reputation as a Tradeable Asset," Working Papers 97033, Stanford University, Department of Economics.
  10. Johannes H�rner, 2002. "Reputation and Competition," American Economic Review, American Economic Association, vol. 92(3), pages 644-663, June.
  11. 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-.
  12. Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, vol. 27(2), pages 280-312, August.
  13. 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.
  14. Quinzii, Martine & Rochet, Jean-Charles, 1985. "Multidimensional signalling," Journal of Mathematical Economics, Elsevier, vol. 14(3), pages 261-284, June.
  15. Alan D. Morrison & William J. Wilhelm Jr, 2004. "Partnership Firms, Reputation, and Human Capital," American Economic Review, American Economic Association, vol. 94(5), pages 1682-1692, December.
  16. Alan Morrison & William J. Wilhelm, Jr., 2003. "Partnership Firms, Reputation and Human Capital," OFRC Working Papers Series 2003fe02, Oxford Financial Research Centre.
  17. Engers, Maxim, 1987. "Signalling with Many Signals," Econometrica, Econometric Society, vol. 55(3), pages 663-74, May.
  18. Jean-Charles Rochet & Philippe Chone, 1998. "Ironing, Sweeping, and Multidimensional Screening," Econometrica, Econometric Society, vol. 66(4), pages 783-826, July.
  19. Axel Anderson & Lones Smith, 2006. "Assortative Matching and Reputation," Cowles Foundation Discussion Papers 1553, Cowles Foundation for Research in Economics, Yale University.
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Cited by:
  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 and International Relations Area.

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