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Trust, reputation and relationships in grazing rights markets: An experimental economic study

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Listed author(s):
  • Reeson, Andrew F.
  • Tisdell, John G.
  • McAllister, Ryan R.J.

Abstract

Trust is frequently a requirement for economic exchanges and the management of natural resources. Providing public information on past actions can promote trust through the formation of reputations. We developed an economic experiment to test whether a formal reputation mechanism could facilitate trusting relationships in the tradable grazing rights markets. Providing information to create formal public reputations for market participants did not increase the overall efficiency of the market. However, it did result in greater equality of income between partners, suggesting that participants showed more concern for their partners when they knew they would be rated. Even with public reputation information, bilateral relationships remained central to the market. Market failures in existing grazing rights markets may be better addressed by measures to increase communication between partners rather than simply relying on a formal reputation mechanism.

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Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 70 (2011)
Issue (Month): 4 (February)
Pages: 651-658

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Handle: RePEc:eee:ecolec:v:70:y:2011:i:4:p:651-658
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolecon

Keywords: Experimental economics Trust Social norms Institutions Agistment Natural resource management Equity;

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Cited by:

  1. Vogt, Nora & Bizer, Kilian, 2013. "Lock-in effects in competitive bidding schemes for payments for ecosystem services: Revisiting the fundamental transformation," Center for European, Governance and Economic Development Research Discussion Papers 158, University of Goettingen, Department of Economics.
  2. Vogt, Nora & Reeson, Andrew F. & Bizer, Kilian, 2013. "Communication, competition and social gift exchange in an auction for public good provision," Ecological Economics, Elsevier, vol. 93(C), pages 11-19.
  3. Simanti Banerjee & Timothy N. Cason & Frans P. de Vries & Nick Hanley, 2015. "Spatial Coordination in Agglomeration Bonus Schemes with Transaction Costs and Communication: An Experimental Study," Working Papers 2015-10, University of St. Andrews, Department of Geography and Sustainable Development.

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