Incentives and Reputation when Names can be Replaced: Valjean Reinvented as Monsieur Madeleine

Bernardita Vial and Felipe Zurita

No 447, Documentos de Trabajo from Instituto de Economia. Pontificia Universidad Católica de Chile.

Abstract: This article studies the effect of the possibility that firms change their names over their incentives for choosing high quality. A firm may want to start over under a new name in order to avoid market punishment, if the reputation carried by its former name is too low. We find that that the effect of the name-changing option on incentives is ambiguous. Although the ability of avoiding punishment generally hurts incentives, it may sometimes improve them. Moreover, doing so may be the only way out a low-effort trap. The conditions under which each case obtains are explored.

Keywords: Reputation; forgiveness; incentives (search for similar items in EconPapers)
JEL-codes: D8 D9 L1 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ioe:doctra:447

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