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The Reputational Budget and its Uses

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  • L. Picci

Abstract

I introduce the concept of the reputational budget, to consider its possible uses within a Reputation-based Governance (Rebag) framework. The concept is illustrated using an application to the management of public works, where firms help public administrations in building public infrastructure. The reputational budget has several interesting applications. In particular, it provides objective criteria to use reputational information in public procurement, and it may alleviate the moral hazard problem that arises in the life-cycle of bureaucrats.

Suggested Citation

  • L. Picci, 2007. "The Reputational Budget and its Uses," Working Papers 587, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:587
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    2. Lucio Picci, 2006. "Reputation-Based Governance of Public Works," Rivista di Politica Economica, SIPI Spa, vol. 96(1), pages 161-184, January-F.
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    5. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
    6. Hirshleifer, Jack, 1971. "The Private and Social Value of Information and the Reward to Inventive Activity," American Economic Review, American Economic Association, vol. 61(4), pages 561-574, September.
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