Firm reputation with hidden information

Steven Tadelis

Economic Theory, 2003, vol. 21, issue 2, 635-651

Abstract: An adverse selection model of firm reputation is developed in which short-lived clients purchase services from firms operated by overlapping generations of agents. A firm's only asset is its name, or reputation, and trade of names is not observed by clients. As a result, names are traded in all equilibria regardless of the economy's horizon The general equilibrium analysis links the value of a name to the market for services. This causes a non-monotonicity that precludes higher types from sorting themselves through the market for names, and leads to “sensible” dynamics: reputations, and name prices, increase after success and decrease after failure. Copyright Springer-Verlag Berlin Heidelberg 2003

Keywords: JEL Classification Numbers: D80; L14.; Keywords and Phrases: Reputation as an asset; Trade of names; Overlapping generations. (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (18)

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DOI: 10.1007/s00199-002-0257-z

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