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What's in a Name? Reputation as a Tradeable Asset

  • Steve Tadelis

August 28, 1997 A firm's reputation is considered an important asset. I develop a model in which a firm's only asset is its name -- which is associated with its reputation -- and study the economic forces which cause names to be valuable, tradeable assets. A simple adverse selection model together with an assumption on the non-observability of shifts of ownership guarantees that in equilibrium the market for names is active. This result is robust to both finite and infinite horizons, in contrast to standard results in the reputation literature. I also show that situations in which only good types buy names with a good reputation cannot be sustained in equilibrium.

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Paper provided by Stanford University, Department of Economics in its series Working Papers with number 97033.

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Date of creation: 28 Aug 1997
Date of revision:
Handle: RePEc:wop:stanec:97033
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  1. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
  2. Holmstrom, Bengt, 1999. "Managerial Incentive Problems: A Dynamic Perspective," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 169-82, January.
  3. repec:oup:qjecon:v:84:y:1970:i:3:p:488-500 is not listed on IDEAS
  4. George J. Mailath & Larry Samuelson, . ""Your Reputation Is Who You're Not, Not Who You'd Like To Be''," CARESS Working Papres 98-11, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  5. Douglas Gale & Robert W. Rosenthal, 1994. "Price and Quality Cycles for Experience Goods," RAND Journal of Economics, The RAND Corporation, vol. 25(4), pages 590-607, Winter.
  6. Steven Tadelis, 2003. "Firm reputation with hidden information," Economic Theory, Springer, vol. 21(2), pages 635-651, 03.
  7. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
  8. repec:oup:restud:v:66:y:1999:i:1:p:169-82 is not listed on IDEAS
  9. Maskin, Eric & Tirole, Jean, 1988. "A Theory of Dynamic Oligopoly, II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles," Econometrica, Econometric Society, vol. 56(3), pages 571-99, May.
  10. Diamond, Douglas W, 1989. "Reputation Acquisition in Debt Markets," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 828-62, August.
  11. Birger Wernerfelt, 1988. "Umbrella Branding as a Signal of New Product Quality: An Example of Signalling by Posting a Bond," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 458-466, Autumn.
  12. Green, Edward J & Porter, Robert H, 1984. "Noncooperative Collusion under Imperfect Price Information," Econometrica, Econometric Society, vol. 52(1), pages 87-100, January.
  13. repec:oup:restud:v:63:y:1996:i:1:p:1-22 is not listed on IDEAS
  14. Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-41, August.
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