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| Author: | Kennes, J. |
| Title: | Simple reputation systems |
| Journal: | Scandinavian Journal of Economics
2007 : VOL, 109:1, p. 71-91 |
| Index terms: | auctions reputation |
| Freeterms: | directed search |
| Language: | eng |
| Abstract: | Simple model of reputation systems monitors and publishes information about the behavior of sellers in a search market with asymmetric information. This article shows that a reputation system that rewards honesty can enhance welfare by allowing good sellers to truthfully signal their type. The same system can also be prone to strategic manipulation by sellers who always have low-quality products. This article also shows that an alternative system which assigns reputations based on product quality rather than honesty can be superior. |
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