4.1 Reputation Formation in Competitive Settings

Most analytical and experimental studies of reputation formation in trading environments have made the assumption that the seller is a monopolist. The dynamics of reputation apparently change in interesting ways when there are several competing sellers. Heski Bar-Isaac presented some preliminary work on this topic [20]. His most striking finding was that competition changes reputational incentives in a non-monotonic manner: the power of reputation rises, then falls, then rises again as a market becomes more competitive. This is an interesting area where more analytical work in needed.


About Paul Resnick

Professor, University of Michigan School of Information Personal home page
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