A Theory of Collective Reputations (with applications to the persistence of corruption and to firm quality)

A Theory of Collective Reputations (with applications to the persistence of corruption and to... The paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations. A member's current incentives are affected by his past behaviour and, because his track record is observed only with noise, by the group's past behaviour as well. The paper thus studies the joint dynamics of individual and collective reputations and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature. It shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone, and it derives necessary and sufficient conditions under which group reputations can be rebuilt. Last, the paper applies the theory to analyse when a large firm can maintain a reputation for quality. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Economic Studies Oxford University Press

A Theory of Collective Reputations (with applications to the persistence of corruption and to firm quality)

The Review of Economic Studies, Volume 63 (1) – Jan 1, 1996

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Publisher
Oxford University Press
Copyright
© Published by Oxford University Press.
ISSN
0034-6527
eISSN
1467-937X
D.O.I.
10.2307/2298112
Publisher site
See Article on Publisher Site

Abstract

The paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations. A member's current incentives are affected by his past behaviour and, because his track record is observed only with noise, by the group's past behaviour as well. The paper thus studies the joint dynamics of individual and collective reputations and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature. It shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone, and it derives necessary and sufficient conditions under which group reputations can be rebuilt. Last, the paper applies the theory to analyse when a large firm can maintain a reputation for quality.

Journal

The Review of Economic StudiesOxford University Press

Published: Jan 1, 1996

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