Reputation Building under Observational Learning

DOI10.1093/RESTUD/RDAC052MaRDI QIDQ6108957zbMATH OpenOpenAlexFDO

Authors Harry Di Pei

Publication date 30 June 2023

Published in Review of Economic Studies (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/2006.08068

zbMATH Keywords

imitationobservational learningreputationreputation failure

Mathematics Subject Classification ID

Hierarchical games (including Stackelberg games) (91A65)

Abstract: I study a social learning model in which the object to learn is a strategic player's endogenous actions rather than an exogenous state. A patient seller faces a sequence of buyers and decides whether to build a reputation for supplying high quality products. Each buyer does not have access to the seller's complete records, but can observe all previous buyers' actions, and some informative private signal about the seller's actions. I examine how the buyers' private signals affect the speed of social learning and the seller's incentives to establish reputations. When each buyer privately observes a bounded subset of the seller's past actions, the speed of learning is strictly positive but can vanish to zero as the seller becomes patient. As a result, reputation building can lead to low payoff for the patient seller and low social welfare. When each buyer observes an unboundedly informative private signal about the seller's current-period action, the speed of learning is uniformly bounded from below and a patient seller can secure high returns from building reputations. My results shed light on the effectiveness of various policies in accelerating social learning and encouraging sellers to establish good reputations.

Recommendations

• Reputation and Survival: Learning in a Dynamic Signalling Model
• Reputation with observed actions
• New, like new, or very good? Reputation and credibility
• Seller Reputation
• Reputation effects under interdependent values

Cited in

(4)

• scientific article; zbMATH DE number 5620856 (Why is no real title available?)
• Partial credence goods on review platforms
• Bad reputation due to incompetent expert
• Melons as lemons: asymmetric information, consumer learning and seller reputation

This page was built for publication: Reputation Building under Observational Learning

Report a bug (only for logged in users!)Click here to report a bug for this page (MaRDI item Q6108957)