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The Dynamics of Collective Reputation

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  • Jonathan Levin

    () (stanford University)

Abstract

I present a stochastic version of Tirole's (1996) collective reputation model. In equilibrium, group behavior is persistent due to a complementarity between the group's reputation, which depends on the past behavior of group members, and current incentives. A group can maintain a strong reputation even as conditions become unfavorable, while an improvement in the environment may not help a group with a poor reputation. I also connect the model to the theory of statistical discrimination and show that the same mechanism can explain why discrimination might persist over time.

Suggested Citation

  • Jonathan Levin, 2009. "The Dynamics of Collective Reputation," Discussion Papers 08-024, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:08-024
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    File URL: http://www-siepr.stanford.edu/repec/sip/08-024.pdf
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    References listed on IDEAS

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    1. Burdzy, Krzysztof & Frankel, David M & Pauzner, Ady, 2001. "Fast Equilibrium Selection by Rational Players Living in a Changing World," Econometrica, Econometric Society, vol. 69(1), pages 163-189, January.
    2. Moro, Andrea & Norman, Peter, 2004. "A general equilibrium model of statistical discrimination," Journal of Economic Theory, Elsevier, vol. 114(1), pages 1-30, January.
    3. Frankel, D.M., 2001. "Shocks and Business Cycles," Papers 2001-10, Tel Aviv.
    4. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
    5. David Frankel & Ady Pauzner, 2000. "Resolving Indeterminacy in Dynamic Settings: The Role of Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 115(1), pages 285-304.
    6. Jean Tirole, 1996. "A Theory of Collective Reputations (with applications to the persistence of corruption and to firm quality)," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 1-22.
    7. Lawrence E. Blume, 2006. "The Dynamics of Statistical Discrimination," Economic Journal, Royal Economic Society, vol. 116(515), pages 480-498, November.
    8. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
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    Cited by:

    1. repec:ers:journl:v:xx:y:2017:i:3a:p:484-499 is not listed on IDEAS
    2. Guimaraes, Bernardo & Machado, Caio, 2013. "Demand expectations and the timing of stimulus policies," MPRA Paper 48895, University Library of Munich, Germany.
    3. Marimon, Ramon & Nicolini, Juan Pablo & Teles, Pedro, 2012. "Money is an experience good: Competition and trust in the private provision of money," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 815-825.
    4. Aidin Hajikhameneh & Jared Rubin, 2017. "Exchange in the Absence of Legal Enforcement: Reputation and Multilateral Punishment under Uncertainty," Working Papers 17-14, Chapman University, Economic Science Institute.
    5. Daniela Benavente, 2010. "Geographical Indications: The Economics of Claw-Back," IHEID Working Papers 11-2010, Economics Section, The Graduate Institute of International Studies.
    6. Kim, Young Chul & Loury, Glenn, 2009. "Group Reputation and the Dynamics of Statistical Discrimination," MPRA Paper 18765, University Library of Munich, Germany.
    7. Pierre Fleckinger & Matthieu Glachant & Gabrielle Moineville, 2017. "Incentives for Quality in Friendly and Hostile Informational Environments," American Economic Journal: Microeconomics, American Economic Association, vol. 9(1), pages 242-274, February.
    8. Lily Hu & Yiling Chen, 2017. "A Short-term Intervention for Long-term Fairness in the Labor Market," Papers 1712.00064, arXiv.org, revised Feb 2018.
    9. Kevin Lang & Jee-Yeon K. Lehmann, 2012. "Racial Discrimination in the Labor Market: Theory and Empirics," Journal of Economic Literature, American Economic Association, vol. 50(4), pages 959-1006, December.
    10. Daniela Benavente, 2010. "The Economics of Geographical Indications: GIs Modelled As Club Assets," IHEID Working Papers 10-2010, Economics Section, The Graduate Institute of International Studies.
    11. Guimarães, Bernardo de Vasconcellos & Machado, Caio Henrique & Pereira, Ana Elisa Gonçalves, 2017. "Dynamic coordination with timing frictions: theory and applications," Textos para discussão 461, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    12. repec:spr:envpol:v:20:y:2018:i:2:d:10.1007_s10018-017-0198-1 is not listed on IDEAS

    More about this item

    Keywords

    Collective Reputation; Triole; Group Behavior; Statistical Discrimination;

    JEL classification:

    • J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other

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