A BEJTE Contributions article.

Abstract

I present a stochastic version of Tirole's (1996) collective reputation model. In equilibrium, group behavior is persistent due to complementarity between the current incentives of group members and the group's reputation, which depends on its history. A group can maintain a strong reputation even as conditions become unfavorable, but an improvement in the environment may not help a group with a poor reputation. I also connect the model to the theory of statistical discrimination and show that the same mechanism can explain why discrimination might persist over time.

Submitted: February 2, 2009 · Accepted: June 20, 2009 · Published: August 25, 2009

Recommended Citation

Levin, Jonathan (2009) "The Dynamics of Collective Reputation," The B.E. Journal of Theoretical Economics: Vol. 9 : Iss. 1 (Contributions), Article 27.
DOI: 10.2202/1935-1704.1548
Available at: http://www.bepress.com/bejte/vol9/iss1/art27