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Jullien, Bruno
and Park, In-Uck
(2009)
New, Like New, or Very Good? Reputation and Credibility.
TSE Working Paper, n. 09-086, Toulouse
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Abstract
We show that sellers may earn reputation for their \ability" to deliver high quality goods on average by honestly announcing the realised quality of items for sale every period. As the expected revenue stream from continuing with honest communication increases with their ability, high ability sellers remain honest while low ability sellers find it too costly and sometimes lie about quality for short-term gain. Thus, cheap-talk communication facilitates the market's learning of a seller's ability and strengthens reputation effects. We study this new reputation mechanism and the induced market dynamics, first when sellers cannot restart with a new identity and then when they can. We extend the analysis to various other situations such as voluntary refund and moral hazard.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Language: | English |
| Date: | July 2009 |
| Place of Publication: | Toulouse |
| JEL Classification: | C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games D82 - Asymmetric and Private Information D83 - Search; Learning; Information and Knowledge; Communication; Belief L14 - Transactional Relationships; Contracts and Reputation; Networks |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Institution: | Université Toulouse 1 Capitole |
| Site: | UT1 |
| Date Deposited: | 18 Jan 2012 06:00 |
| Last Modified: | 02 Apr 2021 15:36 |
| OAI Identifier: | oai:tse-fr.eu:21955 |
| URI: | https://publications.ut-capitole.fr/id/eprint/3263 |
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- New, Like New, or Very Good? Reputation and Credibility. (deposited 18 Jan 2012 06:00) [Currently Displayed]
