IDEAS home Printed from https://ideas.repec.org/p/sip/dpaper/08-024.html
   My bibliography  Save this paper

The Dynamics of Collective Reputation

Author

Listed:
  • Jonathan Levin

    (stanford University)

Abstract

I present a stochastic version of Tirole's (1996) collective reputation model. In equilibrium, group behavior is persistent due to a complementarity between the group's reputation, which depends on the past behavior of group members, and current incentives. A group can maintain a strong reputation even as conditions become unfavorable, while an improvement in the environment may not help a group with a poor reputation. I also connect the model to the theory of statistical discrimination and show that the same mechanism can explain why discrimination might persist over time.

Suggested Citation

  • Jonathan Levin, 2009. "The Dynamics of Collective Reputation," Discussion Papers 08-024, Stanford Institute for Economic Policy Research.
    • Handle: RePEc:sip:dpaper:08-024
    as

    Download full text from publisher

    File URL: http://www-siepr.stanford.edu/repec/sip/08-024.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Frankel & Ady Pauzner, 2000. "Resolving Indeterminacy in Dynamic Settings: The Role of Shocks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(1), pages 285-304.
    2. Burdzy, Krzysztof & Frankel, David M & Pauzner, Ady, 2001. "Fast Equilibrium Selection by Rational Players Living in a Changing World," Econometrica, Econometric Society, vol. 69(1), pages 163-189, January.
    3. Jean Tirole, 1996. "A Theory of Collective Reputations (with applications to the persistence of corruption and to firm quality)," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(1), pages 1-22.
    4. Lawrence E. Blume, 2006. "The Dynamics of Statistical Discrimination," Economic Journal, Royal Economic Society, vol. 116(515), pages 480-498, November.
    5. Moro, Andrea & Norman, Peter, 2004. "A general equilibrium model of statistical discrimination," Journal of Economic Theory, Elsevier, vol. 114(1), pages 1-30, January.
    6. Frankel David M & Burdzy Krzysztof, 2005. "Shocks and Business Cycles," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 5(1), pages 1-88, March.
    7. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
    8. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-1277, November.
    9. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marimon, Ramon & Nicolini, Juan Pablo & Teles, Pedro, 2012. "Money is an experience good: Competition and trust in the private provision of money," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 815-825.
    2. Pierre Fleckinger & Matthieu Glachant & Gabrielle Moineville, 2017. "Incentives for Quality in Friendly and Hostile Informational Environments," American Economic Journal: Microeconomics, American Economic Association, vol. 9(1), pages 242-274, February.
    3. Daniela Benavente, 2010. "Geographical Indications: The Economics of Claw-Back," IHEID Working Papers 11-2010, Economics Section, The Graduate Institute of International Studies.
    4. Guimaraes, Bernardo & Machado, Caio, 2013. "Demand expectations and the timing of stimulus policies," MPRA Paper 48895, University Library of Munich, Germany.
    5. Michael Junho Lee & Daniel Neuhann, 2019. "A Dynamic Theory of Collateral Quality and Long-Term Interventions," Staff Reports 894, Federal Reserve Bank of New York.
    6. Kim, Young Chul & Loury, Glenn, 2009. "Group Reputation and the Dynamics of Statistical Discrimination," MPRA Paper 18765, University Library of Munich, Germany.
    7. Kaifu Zhang, 2015. "Breaking Free of a Stereotype: Should a Domestic Brand Pretend to Be a Foreign One?," Marketing Science, INFORMS, vol. 34(4), pages 539-554, July.
    8. Lily Hu & Yiling Chen, 2017. "A Short-term Intervention for Long-term Fairness in the Labor Market," Papers 1712.00064, arXiv.org, revised Feb 2018.
    9. Fulvio Fontini & Katrin Millock & Michele Moretto, 2018. "Collective reputation with stochastic production and unknown willingness to pay for quality," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(2), pages 387-410, April.
    10. Kevin Lang & Jee-Yeon K. Lehmann, 2012. "Racial Discrimination in the Labor Market: Theory and Empirics," Journal of Economic Literature, American Economic Association, vol. 50(4), pages 959-1006, December.
    11. Felix Bracht & Jeroen Mahieu & Steven Vanhaverbeke, 2022. "The signaling value of legal form in debt financing," POID Working Papers 052, Centre for Economic Performance, LSE.
    12. Bernardo Guimaraes & Caio Machado & Ana E. Pereira, 2020. "Dynamic coordination with timing frictions: Theory and applications," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 656-697, June.
    13. Giacomo Negro & Michael T. Hannan & Magali Fassiotto, 2015. "Category Signaling and Reputation," Organization Science, INFORMS, vol. 26(2), pages 584-600, April.
    14. Mikhail Yakovlevich Veselovsky & Pavel Pavlovich Pilipenko & Vladimir Gavrilovich Savenko & Anna Gennadyevna Glebova & Lyudmila Aleksandrovna Shmeleva, 2017. "The Organization of the Innovation Transfer in the Agro-industrial Complex of Russia," European Research Studies Journal, European Research Studies Journal, vol. 0(3A), pages 484-499.
    15. Aidin Hajikhameneh & Jared Rubin, 2019. "Exchange in the Absence of Legal Enforcement: Reputation and Multilateral Punishment under Uncertainty," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 35(1), pages 192-237.
    16. Zvika Neeman & Aniko Öry & Jungju Yu, 2019. "The benefit of collective reputation," RAND Journal of Economics, RAND Corporation, vol. 50(4), pages 787-821, December.
    17. Pierre-Yves Yanni, 2012. "Coarse Information and Entrepreneurial Risk Choice," 2012 Meeting Papers 1142, Society for Economic Dynamics.
    18. Baniak Andrzej & Grajzl Peter, 2013. "Equilibrium and Welfare in a Model of Torts with Industry Reputation Effects," Review of Law & Economics, De Gruyter, vol. 9(2), pages 265-302, October.
    19. Bracht, Felix & Mahieu, Jeroen & Vanhaverbeke, Steven, 2023. "The signaling value of legal form in debt financing," LSE Research Online Documents on Economics 121335, London School of Economics and Political Science, LSE Library.
    20. Bracht, Felix & Mahieu, Jeroen & Vanhaverbeke, Steven, 2024. "The signaling value of legal form in entrepreneurial debt financing," Journal of Business Venturing, Elsevier, vol. 39(3).
    21. Kim, Young-Chul & Loury, Glenn, 2012. "Collective Reputation and the Dynamics of Statistical Discrimination," MPRA Paper 54950, University Library of Munich, Germany, revised 31 Mar 2014.
    22. Felix Bracht & Jeroen Mahieu & Steven Vanhaverbeke, 2023. "The signaling value of legal form in debt financing," CEP Discussion Papers dp1914, Centre for Economic Performance, LSE.
    23. Jie Bai & Ludovica Gazze & Yukun Wang, 2019. "Collective Reputation in Trade: Evidence from the Chinese Dairy Industry," CID Working Papers 366, Center for International Development at Harvard University.
    24. Jie Bai & Ludovica Gazze & Yukun Wang, 2019. "Collective Reputation in Trade: Evidence from the Chinese Dairy Industry," NBER Working Papers 26283, National Bureau of Economic Research, Inc.
    25. Daniela Benavente, 2010. "The Economics of Geographical Indications: GIs Modelled As Club Assets," IHEID Working Papers 10-2010, Economics Section, The Graduate Institute of International Studies.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:cep:stieop:56 is not listed on IDEAS
    2. Guo Xu, 2015. "How Does Collective Reputation Affect Hiring? Selection and Sorting in an Online Labour Market," STICERD - Economic Organisation and Public Policy Discussion Papers Series 056, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    3. Frankel, David M. & Morris, Stephen & Pauzner, Ady, 2003. "Equilibrium selection in global games with strategic complementarities," Journal of Economic Theory, Elsevier, vol. 108(1), pages 1-44, January.
    4. Frankel, David M., 2017. "Efficient ex-ante stabilization of firms," Journal of Economic Theory, Elsevier, vol. 170(C), pages 112-144.
    5. Guimaraes, Bernardo & Machado, Caio, 2013. "Demand expectations and the timing of stimulus policies," MPRA Paper 48895, University Library of Munich, Germany.
    6. Steiner, Jakub, 2008. "Coordination cycles," Games and Economic Behavior, Elsevier, vol. 63(1), pages 308-327, May.
    7. Angeletos, G.-M. & Lian, C., 2016. "Incomplete Information in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1065-1240, Elsevier.
    8. Guimaraes, Bernardo & Pereira, Ana Elisa, 2017. "Dynamic coordination among heterogeneous agents," Journal of Mathematical Economics, Elsevier, vol. 73(C), pages 13-33.
    9. Bernardo Guimaraes & Caio Machado & Ana E. Pereira, 2020. "Dynamic coordination with timing frictions: Theory and applications," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 656-697, June.
    10. George-Marios Angeletos & Chen Lian, 2016. "Incomplete Information in Macroeconomics: Accommodating Frictions in Coordination," NBER Working Papers 22297, National Bureau of Economic Research, Inc.
    11. Kim, Young Chul & Loury, Glenn, 2009. "Group Reputation and the Dynamics of Statistical Discrimination," MPRA Paper 18765, University Library of Munich, Germany.
    12. Karp, Larry & Lee, In Ho & Mason, Robin, 2007. "A global game with strategic substitutes and complements," Games and Economic Behavior, Elsevier, vol. 60(1), pages 155-175, July.
    13. Daisuke Oyama, 2004. "Booms And Slumps In A Game Of Sequential Investment With The Changing Fundamentals," The Japanese Economic Review, Japanese Economic Association, vol. 55(3), pages 311-320, September.
    14. Frankel, David M., 2015. "Insuring Customers of a Unionized Firm Against Loss of Network Benefits," Staff General Research Papers Archive 38580, Iowa State University, Department of Economics.
    15. Guimaraes, Bernardo & Pereira, Ana Elisa, 2016. "QWERTY is efficient," Journal of Economic Theory, Elsevier, vol. 163(C), pages 819-825.
    16. Stephen Morris & Hyun Song Shin, 2000. "Global Games: Theory and Applications," Cowles Foundation Discussion Papers 1275, Cowles Foundation for Research in Economics, Yale University.
    17. Dennis L. Gärtner, 2022. "Corporate Leniency in a Dynamic World: The Preemptive Push of an Uncertain Future," Journal of Industrial Economics, Wiley Blackwell, vol. 70(1), pages 119-146, March.
    18. Antonio Cabrales & Rosemarie Nagel & Roc Armenter, 2007. "Equilibrium selection through incomplete information in coordination games: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 10(3), pages 221-234, September.
    19. Pierre Fleckinger & Matthieu Glachant & Gabrielle Moineville, 2017. "Incentives for Quality in Friendly and Hostile Informational Environments," American Economic Journal: Microeconomics, American Economic Association, vol. 9(1), pages 242-274, February.
    20. Bramoullé, Yann & Goyal, Sanjeev, 2016. "Favoritism," Journal of Development Economics, Elsevier, vol. 122(C), pages 16-27.
    21. Roland G. Fryer & Matthew O. Jackson, 2002. "Categorical Cognition: A Psychological Model of Categories and Identification in Decision Making," Microeconomics 0211002, University Library of Munich, Germany.

    More about this item

    Keywords

    Collective Reputation; Triole; Group Behavior; Statistical Discrimination;
    All these keywords.

    JEL classification:

    • J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sip:dpaper:08-024. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anne Shor (email available below). General contact details of provider: https://edirc.repec.org/data/cestaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.