The Dynamics of Collective Reputation
I present a stochastic version of Tirole's (1996) collective reputation model. In equilibrium, group behavior is persistent due to complementarity between the current incentives of group members and the group's reputation, which depends on its history. A group can maintain a strong reputation even as conditions become unfavorable, but an improvement in the environment may not help a group with a poor reputation. I also connect the model to the theory of statistical discrimination and show that the same mechanism can explain why discrimination might persist over time.
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Volume (Year): 9 (2009)
Issue (Month): 1 (August)
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References listed on IDEAS
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- Moro,A. & Norman,P., 2001.
"A general equilibrium model of statistical discrimination,"
4, Wisconsin Madison - Social Systems.
- Moro, Andrea & Norman, Peter, 2004. "A general equilibrium model of statistical discrimination," Journal of Economic Theory, Elsevier, vol. 114(1), pages 1-30, January.
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- Frankel, David M. & Pauzner, Ady, 2000. "Resolving Indeterminacy in Dynamic Settings: The Role of Shocks," Staff General Research Papers 11924, Iowa State University, Department of Economics.
- Frankel, D.M., 2001.
"Shocks and Business Cycles,"
2001-10, Tel Aviv.
- Jean Tirole, 1996. "A Theory of Collective Reputations (with applications to the persistence of corruption and to firm quality)," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 1-22.
- Lawrence E. Blume, 2006. "The Dynamics of Statistical Discrimination," Economic Journal, Royal Economic Society, vol. 116(515), pages F480-F498, November.
- Burdzy, Krzysztof & Frankel, David M & Pauzner, Ady, 2001.
"Fast Equilibrium Selection by Rational Players Living in a Changing World,"
Econometric Society, vol. 69(1), pages 163-89, January.
- Frankel, David M. & Burdzy, Krzysztof & Pauzner, Ady, 2001. "Fast Equilibrium Selection by Rational Players Living in a Changing World," Staff General Research Papers 11923, Iowa State University, Department of Economics.
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