Incentives and Reputation when Names can be Replaced: Valjean Reinvented as Monsieur Madeleine
This article studies the effect of the possibility that firms change their names over their incentives for choosing high quality. A firm may want to start over under a new name in order to avoid market punishment, if the reputation carried by its former name is too low. We find that that the effect of the name-changing option on incentives is ambiguous. Although the ability of avoiding punishment generally hurts incentives, it may sometimes improve them. Moreover, doing so may be the only way out a low-effort trap. The conditions under which each case obtains are explored.
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- Steve Tadelis, 1997.
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97033, Stanford University, Department of Economics.
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"Reputation and Survival: Learning in a Dynamic Signalling Model,"
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- Heski Bar-Isaac, 2003. "Reputation and Survival: Learning in a Dynamic Signalling Model," Review of Economic Studies, Wiley Blackwell, vol. 70(2), pages 231-251, 04.
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- Mehmet Ekmekci, 2010.
"Sustainable Reputations with Rating Systems,"
1505, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Vial Bernardita, 2010. "Walrasian Equilibrium and Reputation under Imperfect Public Monitoring," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-44, May.
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