A Theory of Collective Reputations (with applications to the persistence of corruption and to firm quality)

Jean Tirole

Research output: Contribution to journalArticlepeer-review

474 Scopus citations

Abstract

The paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations. A member's current incentives are affected by his past behaviour and, because his track record is observed only with noise, by the group's past behaviour as well. The paper thus studies the joint dynamics of individual and collective reputations and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature. It shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone, and it derives necessary and sufficient conditions under which group reputations can be rebuilt. Last, the paper applies the theory to analyse when a large firm can maintain a reputation for quality.

Original languageEnglish (US)
Pages (from-to)1-22
Number of pages22
JournalReview of Economic Studies
Volume63
Issue number1
DOIs
StatePublished - 1996

ASJC Scopus subject areas

  • Economics and Econometrics

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