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Author: | Ahn, I. Suominen, M. |
Title: | World-of-mouth communication and community enforcement |
Journal: | International Economic Review
2001 : MAY, VOL. 42:2, p. 399-415 |
Index terms: | International trade Econometric models Buying Selling |
Language: | eng |
Abstract: | The authors study a repeated game where a seller, who has a short-term incentive to supply low quality, is periodically matched with a ramdomly selected buyer. Buyers observe only the outcomes of their neighbors' games and may receive signals from them. When the buyer population is large, the seller may sell high quality even when each buyer observes her action in any given period with an arbitrarily small probability. The authors characterize an equilibrium where the seller randomizes between high and low quality. |
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