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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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    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.
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    5. David Frankel & Ady Pauzner, 2000. "Resolving Indeterminacy in Dynamic Settings: The Role of Shocks," The Quarterly Journal of Economics, President and Fellows of Harvard College, 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)," The Review of Economic Studies, Review of Economic Studies Ltd, 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. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-1277, November.
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    More about this item

    Keywords

    Collective Reputation; Triole; Group Behavior; Statistical Discrimination;
    All these keywords.

    JEL classification:

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

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