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Group reputations: An experimental foray

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  • Huck, Steffen
  • Lünser, Gabriele K.

Abstract

Often 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.

Suggested Citation

  • Huck, Steffen & Lünser, Gabriele K., 2010. "Group reputations: An experimental foray," Journal of Economic Behavior & Organization, Elsevier, vol. 73(2), pages 153-157, February.
  • Handle: RePEc:eee:jeborg:v:73:y:2010:i:2:p:153-157
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    Cited by:

    1. Suchon, Rémi & Houser, Daniel, 2022. "Image spillovers in groups and misreporting," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 302-314.
    2. McIntosh, Craig & Sadoulet, Elisabeth & Buck, Steven & Rosada, Tomas, 2013. "Reputation in a public goods game: Taking the design of credit bureaus to the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 270-285.
    3. Lumeau, Marianne & Masclet, David & Penard, Thierry, 2015. "Reputation and social (dis)approval in feedback mechanisms: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 112(C), pages 127-140.
    4. Alexander E. Saak, 2012. "Collective Reputation, Social Norms, and Participation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(3), pages 763-785.
    5. Alejandro T. Moreno-Okuno & Alejandro Mosiño, 2017. "A theory of sequential group reciprocity," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 26(1), pages 1-19, December.
    6. Aidin Hajikhameneh & Erik O. Kimbrough, 2019. "Individualism, collectivism, and trade," Experimental Economics, Springer;Economic Science Association, vol. 22(2), pages 294-324, June.
    7. Hajikhameneh, Aidin, 2024. "Reputation or court: Individualism, collectivism, and the choice of enforcement mechanism in exchange," Journal of Economic Behavior & Organization, Elsevier, vol. 217(C), pages 184-206.
    8. Bar-El, Ronen & Hatsor, Limor & Tobol, Yossef, 2020. "Home production, market substitutes, and the labor supply of mothers," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 378-390.
    9. He, Simin & Zhu, Xun, 2023. "Real-time monitoring in a public-goods game," Games and Economic Behavior, Elsevier, vol. 142(C), pages 454-479.

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    More about this item

    Keywords

    Trust Group reputations Moral hazard Information conditions;

    JEL classification:

    • 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, Pricing, and Design - - - General
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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