Consumer Networks and Firm Reputation: A First Experimental Investigation
Arguing that consumers are the carriers of firms’ reputations, we examine the role of consumer networks for trust in markets that suffer from moral hazard. When consumers are embedded in a network, they can exchange information with their neighbours about their private experiences with different sellers. We find that such information exchange fosters firms' incentives for reputation building and, thus, enhances trust and efficiency in markets. This efficiency-enhancing effect is already achieved with a rather low level of network density.
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- Gary E. Bolton & Elena Katok & Axel Ockenfels, 2004.
"How Effective Are Electronic Reputation Mechanisms? An Experimental Investigation,"
INFORMS, vol. 50(11), pages 1587-1602, November.
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- Steffen Huck & Gabriele K. Ruchala & Jean-Robert Tyran, 2006.
"Competition Fosters Trust,"
06-22, University of Copenhagen. Department of Economics.
- Armin Falk, Michael Kosfeld, .
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IEW - Working Papers
146, Institute for Empirical Research in Economics - University of Zurich.
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"Repetition and Reputation: Implications for Trust and Trustworthiness When Institutions Change,"
CREMA Working Paper Series
2004-09, Center for Research in Economics, Management and the Arts (CREMA).
- Iris Bohnet & Steffen Huck, 2004. "Repetition and Reputation: Implications for Trust and Trustworthiness When Institutions Change," American Economic Review, American Economic Association, vol. 94(2), pages 362-366, May.
- Iris Bohnet & Heike Harmgart & Steffen Huck & Jean-Robert Tyran, 2005. "Learning Trust," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 322-329, 04/05.
- Kosfeld Michael, 2004. "Economic Networks in the Laboratory: A Survey," Review of Network Economics, De Gruyter, vol. 3(1), pages 1-23, March.
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- Brit Grosskopf & Rajiv Sarin, 2010. "Is Reputation Good or Bad? An Experiment," American Economic Review, American Economic Association, vol. 100(5), pages 2187-2204, December.
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