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Repetition and Reputation: Implications for Trust and Trustworthiness in the Short and in the Long Run

Author

Listed:
  • Bohnet, Iris

    (Harvard U)

  • Huck, Steffen

    (U College London)

Abstract

Repeat transactions are not necessarily the rule in today's global economy. Indirect reputation systems, where buyers base their decisions on a seller's previous interactions with other buyers, are a potential substitute for personal interactions - provided such information is available. This paper examines experimentally to what degree indirect reputation building substitutes for direct reputation building in repeat interactions in the short run and analyzes the effects these environments have on behavior in the long run. We find that repeat interactions are the most effective institutional arrangement to foster trust and trustworthiness in the short and in the long run.

Suggested Citation

  • Bohnet, Iris & Huck, Steffen, 2003. "Repetition and Reputation: Implications for Trust and Trustworthiness in the Short and in the Long Run," Working Paper Series rwp03-048, Harvard University, John F. Kennedy School of Government.
  • Handle: RePEc:ecl:harjfk:rwp03-048
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    File URL: https://research.hks.harvard.edu/publications/getFile.aspx?Id=103
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    References listed on IDEAS

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    1. Andreoni, James & Croson, Rachel, 2008. "Partners versus Strangers: Random Rematching in Public Goods Experiments," Handbook of Experimental Economics Results, Elsevier.
    2. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
    3. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December.
    4. Erev, Ido & Roth, Alvin E, 1998. "Predicting How People Play Games: Reinforcement Learning in Experimental Games with Unique, Mixed Strategy Equilibria," American Economic Review, American Economic Association, vol. 88(4), pages 848-881, September.
    5. Paul Resnick & Richard Zeckhauser & John Swanson & Kate Lockwood, 2006. "The value of reputation on eBay: A controlled experiment," Experimental Economics, Springer;Economic Science Association, vol. 9(2), pages 79-101, June.
    6. Croson, Rachel T. A., 1996. "Partners and strangers revisited," Economics Letters, Elsevier, vol. 53(1), pages 25-32, October.
    7. repec:cup:apsrev:v:95:y:2001:i:01:p:131-144_00 is not listed on IDEAS
    8. Bohnet, Iris & Frey, Bruno S. & Huck, Steffen, 2001. "More Order with Less Law: On Contract Enforcement, Trust, and Crowding," American Political Science Review, Cambridge University Press, vol. 95(01), pages 131-144, March.
    9. Andereoni, J., 1988. "Why Free Ride? Strategies And Learning In Public Goods Experiments," Working papers 375, Wisconsin Madison - Social Systems.
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    Cited by:

    1. Kanagaretnam, Kiridaran & Mestelman, Stuart & Nainar, S.M. Khalid & Shehata, Mohamed, 2010. "Trust and reciprocity with transparency and repeated interactions," Journal of Business Research, Elsevier, vol. 63(3), pages 241-247, March.

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