Asymmetry of Reputation Loss and Recovery under Endogenous Relationships: Theory and Evidence
説明
This paper is inspired by real-world phenomena that firms lose customers based on imprecise information and take a long time to recover. If consumers are playing an ordinary repeated game with fixed partners, there is no clear reason why recovery slowly happens. However, if consumers are playing an endogenously repeated game, a class of simple efficient equilibria exhibits the asymmetry of fast loss of customers after a bad signal and slow recovery. Exit is systematic but formation of a new partnership is random. We also give empirical evidence of our equilibria at an individual-firm level.
収録刊行物
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- SSRN Electronic Journal
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SSRN Electronic Journal 2011-01-01
Elsevier BV