TY  - RPRT
CY  - Toulouse, France
ID  - publications45138
UR  - http://tse-fr.eu/pub/126845
A1  - Hörner, Johannes
A1  - Sanktjohanser, Anna
Y1  - 2022/03//
N2  - We consider a repeated game, in which due to private information and a lack of flexible transfers, cooperation cannot be sustained efficiently. In each round, the buyer either buys from the seller or takes an outside option. The fluctuating outside option may be public or private information. When the buyer visits, the seller chooses what quality to provide. We find that the buyer initially forgoes mutually beneficial trades before then visiting more often than he would like to, myopically. Under private information, the relationship recurrently undergoes gradual self-reinforcing downturns when trust is broken and instantaneous recoveries when loyalty is shown.
PB  - TSE Working Paper
T3  - TSE Working Paper
KW  - Trust
KW  - Loyalty
KW  - Imperfect Monitoring
M1  - working_paper
TI  - Too Much of A Good Thing?
AV  - public
EP  - 60
ER  -