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Giving Gossips Their Due: Information Provision in Games with Private Monitoring

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Author Info
Robert Gazzale (Williams College)

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Abstract

The ability of a long-lived seller to maintain and profit from a good reputation may induce her to provide high quality or effort despite short-run incentives to the contrary. This incentive remains in place with private monitoring, provided that buyers share their information. However, this assumption is unrealistic in environments where information sharing is costly or the beneficiaries of a buyer’s sharing are strangers. I study a simple mechanism that induces costly information provision, and may explain such behavior in environments where the incentives are not overt. Agents who possess information may share it with the community and acquire a reputation for gossiping. Reputations function in tandem: sellers provide high effort because they face agents with reputations for information sharing, and expect the outcome of their dealings will be made public, while information holders share their information as a reputation for doing so results in higher effort from sellers.

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File URL: http://129.3.20.41/eps/game/papers/0508/0508002.pdf
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Publisher Info
Paper provided by EconWPA in its series Game Theory and Information with number 0508002.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 47 pages
Date of creation: 04 Aug 2005
Date of revision:
Handle: RePEc:wpa:wuwpga:0508002

Note: Type of Document - pdf; pages: 47
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Web page: http://129.3.20.41

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Related research
Keywords: reputation; moral hazard; information sharing; mechanism design;

Find related papers by JEL classification:
C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
D8 - Microeconomics - - Information, Knowledge, and Uncertainty

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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. Eckel, Catherine C. & Grossman, Philip J., 1996. "Altruism in Anonymous Dictator Games," Games and Economic Behavior, Elsevier, vol. 16(2), pages 181-191, October. [Downloadable!] (restricted)
  2. Kihlstrom, Richard E & Riordan, Michael H, 1984. "Advertising as a Signal," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 427-50, June. [Downloadable!] (restricted)
  3. Kandori, Michihiro, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Blackwell Publishing, vol. 59(1), pages 63-80, January. [Downloadable!] (restricted)
  4. 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)
  5. Jeffrey C. Ely & Juuso Välimäki, 2003. "Bad Reputation," The Quarterly Journal of Economics, MIT Press, vol. 118(3), pages 785-814, August. [Downloadable!] (restricted)
    Other versions:
  6. Okuno-Fujiwara Masahiro & Postlewaite Andrew, 1995. "Social Norms and Random Matching Games," Games and Economic Behavior, Elsevier, vol. 9(1), pages 79-109, April. [Downloadable!] (restricted)
  7. Drew Fudenberg & David K Levine, 1999. "Efficiency and Observability with Long-Run and Short-Run Players," Levine's Working Paper Archive 81, David K. Levine. [Downloadable!]
    Other versions:
  8. Christopher Avery & Paul Resnick & Richard Zeckhauser, 1999. "The Market for Evaluations," American Economic Review, American Economic Association, vol. 89(3), pages 564-584, June. [Downloadable!] (restricted)
  9. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August. [Downloadable!] (restricted)
    Other versions:
  10. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-41, August. [Downloadable!] (restricted)
  11. Ben-Porath, Elchanan & Kahneman, Michael, 2003. "Communication in repeated games with costly monitoring," Games and Economic Behavior, Elsevier, vol. 44(2), pages 227-250, August. [Downloadable!] (restricted)
  12. Hoffman, Elizabeth & McCabe, Kevin & Smith, Vernon L, 1996. "Social Distance and Other-Regarding Behavior in Dictator Games," American Economic Review, American Economic Association, vol. 86(3), pages 653-60, June. [Downloadable!] (restricted)
  13. North, Douglass C, 1991. "Institutions," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 97-112, Winter. [Downloadable!] (restricted)
  14. Gary E. Bolton & Elena Katok & Axel Ockenfels, 2003. "How Effective are Electronic Reputation Mechanisms? An Experimental Investigation," Working Paper Series in Economics 3, University of Cologne, Department of Economics. [Downloadable!]
  15. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May. [Downloadable!] (restricted)
  16. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March. [Downloadable!] (restricted)
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Cited by:
(explanations, 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. Robert S. Gazzale & Tapan Khopkar, 2008. "Remain Silent and Ye Shall Suffer: Seller Exploitation of Reticent Buyers in an Experimental Reputation System," Department of Economics Working Papers 2008-22, Department of Economics, Williams College. [Downloadable!]
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