Reputation deals: a theory of endogenous teams

Gunther Lang

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: This paper complements the traditional theory of teams (Fama (1980), Holmstrom (1982a,b)) by introducing endogenous team formation by agents who are concerned with their reputations and are informed about the types of their potential teammates. Such a situation leads to a trade of between joining a high-productivity type but a low-reputation partner. It is examined whether there are gains from trade, both, for the case of non-transferable and transferable utility, and what can be learned from reputation deals. Furthermore, a signaling model of teaming is developed that captures in a consistent way the process of information acquisition by the agents' strategic opponent, the market

Keywords: Endogenous teams; reputation; signaling; adverse selection (search for similar items in EconPapers)
JEL-codes: C72 C78 L14 L23 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp404

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