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Share the Fame or Share the Blame? The Reputational Implications of Partnerships

  • Costa, Luis Almeida e
  • Vasconcelos, Luis

We use an adverse selection model to study the dynamics of ?rms?reputations when ?rms implement joint projects. We show that in contrast with projects implemented by a single ?rm, in the case of joint projects a ?rm?s reputation does not necessarily increase following a success and does not necessarily decrease following a failure. We also study how reputation considerations a¤ect ?rms? decisions to participate in joint projects. We show that a high quality partner may not be preferable to a low quality partner, and that a high reputation partner is not necessarily preferable to a low reputation partner. JEL codes: L14, L15, L24, D82, D85

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File URL: http://fesrvsd.fe.unl.pt/WPFEUNL/WP2008/wp539.pdf
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Paper provided by Universidade Nova de Lisboa, Faculdade de Economia in its series FEUNL Working Paper Series with number wp539.

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Length: 39 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:unl:unlfep:wp539
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  1. Luis M.B. Cabral, 2000. "Stretching Firm and Brand Reputation," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 658-673, Winter.
  2. Johannes H�rner, 2002. "Reputation and Competition," American Economic Review, American Economic Association, vol. 92(3), pages 644-663, June.
  3. Jean-Charles Rochet & Philippe Chone, 1998. "Ironing, Sweeping, and Multidimensional Screening," Econometrica, Econometric Society, vol. 66(4), pages 783-826, July.
  4. Steven Tadelis, 2002. "The Market for Reputations as an Incentive Mechanism," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 854-882, August.
  5. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
  6. Paul Milgrom & John Roberts, 1980. "Predation, Reputation, and Entry Deterrence," Discussion Papers 427, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Miklos-Thal, Jeanine, 2008. "Linking Reputations: The Signaling and Feedback Effects of Umbrella Branding," MPRA Paper 11045, University Library of Munich, Germany.
  8. Steven Tadelis, 1999. "What's in a Name? Reputation as a Tradeable Asset," American Economic Review, American Economic Association, vol. 89(3), pages 548-563, June.
  9. Hendrik Hakenes & Martin Peitz, 2007. "Observable Reputation Trading," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 693-730, 05.
  10. George J. Mailath & Larry Samuelson, 2000. "Who Wants a Good Reputation?," CARESS Working Papres sell-rep, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  11. Wilson, Robert, 1985. "Multi-dimensional signalling," Economics Letters, Elsevier, vol. 19(1), pages 17-21.
  12. Engers, Maxim, 1987. "Signalling with Many Signals," Econometrica, Econometric Society, vol. 55(3), pages 663-74, May.
  13. Alan D. Morrison & William J. Wilhelm Jr, 2004. "Partnership Firms, Reputation, and Human Capital," American Economic Review, American Economic Association, vol. 94(5), pages 1682-1692, December.
  14. Axel Anderson & Lones Smith, 2006. "Assortative Matching and Reputation," Cowles Foundation Discussion Papers 1553, Cowles Foundation for Research in Economics, Yale University.
  15. Günther Lang, 2003. "Reputation deals: A theory of endogenous teams," Atlantic Economic Journal, International Atlantic Economic Society, vol. 31(1), pages 32-50, March.
  16. Segendorff, Björn, 2000. "A Signalling Theory of Scapegoats," SSE/EFI Working Paper Series in Economics and Finance 406, Stockholm School of Economics.
  17. Alan Morrison & William J. Wilhelm, Jr., 2003. "Partnership Firms, Reputation and Human Capital," OFRC Working Papers Series 2003fe02, Oxford Financial Research Centre.
  18. Quinzii, Martine & Rochet, Jean-Charles, 1985. "Multidimensional signalling," Journal of Mathematical Economics, Elsevier, vol. 14(3), pages 261-284, June.
  19. Shapiro, Carl, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, MIT Press, vol. 98(4), pages 659-79, November.
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