Modeling the „Visitors to Rome“ effect: Reputation Building in Anglo-Saxon Buyout Funds in Japan
Georg Blind and
Lottanti von Mandach Stefania
MPRA Paper from University Library of Munich, Germany
Stereotypes pose a major challenge to agents entering a foreign market. In order to overcome these stereotypes, visitor agents may decide to emulate domestic behavior. We develop a simple model of reputation building in transactions where identities are revealed and show that this tendency may even imply over-assimilation if stereotypes are sticky and assimilation efforts are not overly costly. The model predictions are tested using data on private equity-led buyout transactions in Japan from 1998 to 2015. While early transactions by Anglo-Saxon investors display marked differences, there is a strong tendency toward approximation of domestic standards, which eventually leads to over-compensation.
Keywords: Reputation building; stereotypes; strategically revealed preferences; buyout investments; heterogeneous preferences (search for similar items in EconPapers)
JEL-codes: D03 F65 G02 G23 Z13 (search for similar items in EconPapers)
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Journal Article: Of pride and prejudice: agent learning under sticky and persistent stereotype (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:77761
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