Fragility of reputation and clustering of risk-taking

, L. ()
Additional contact information
, L.: Department of Economics, University of Pennsylvania
Authors registered in the RePEc Author Service: Guillermo L. Ordonez

Theoretical Economics, 2013, vol. 8, issue 3

Abstract: Reputation concerns in credit markets restrain borrowers' temptations to take excessive risk. The strength of these concerns depends on the behavior of other borrowers, rendering the reputational discipline fragile and subject to breakdowns without obvious changes in economic fundamentals. Furthermore, at an aggregate level, breakdowns are clustered among borrowers with intermediate and good reputations, magnifying otherwise small economic shocks.

Keywords: Reputation; global games; risk-taking; fragility (search for similar items in EconPapers)
JEL-codes: D82 E44 G01 G32 (search for similar items in EconPapers)
Date: 2013-09-18
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Fragility of reputation and clustering of risk-taking (2009)
Working Paper: Fragility of Reputation and Clustering in Risk Taking (2008)
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