The Market for Reputations as an Incentive Mechanism
Bibliographic Data
| ID | 10177052 |
|---|---|
| Authors | Steven Tadelis (0000-0001-8864-8052, Stanford University, corresponding author) |
| Year | 2002 |
| Volume | 110 |
| Issue | 4 |
| Pages | 854-882 |
| Publication date | 2002-08-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/340781 |
| OpenAlex | W3125164270 |
| Language | EN |
| Citations received | 8 |
| References cited | 13 |
Reputational career concerns provide incentives for short-lived agents to work hard, but it is well known that these incentives disappear as an agent reaches retirement. This paper investigates the effects of a market for firm reputations on the life cycle incentives of firm owners to exert effort. A dynamic general equilibrium model with moral hazard and adverse selection generates two main results. First, incentives of young and old agents are quantitatively equal, implying that incentives are "ageless" with a market for reputations. Second, good reputations cannot act as effective sorting devices: in equilibrium, more able agents cannot outbid lesser ones in the market for good reputations. In addition, welfare analysis shows that social surplus can fall if clients observe trade in firm reputations
Adverse selection · Economics · Incentive · Market economy · Microeconomics · Moral hazard · Sorting · Welfare · Work (physics · Corporate Finance and Governance · Economic Policies and Impacts · Politics, Economics, and Education Policy
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Dynamic Incentive Mechanism for Large-scale Projects Based on the Reputation Effects
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Corporate culture and economic theory
Law Enforcement, Malfeasance, and Compensation of Enforcers
Optimal Incentive Contracts in the Presence of Career Concerns
Why Is There Mandatory Retirement
Reputation Acquisition in Debt Markets
Agency Problems and the Theory of the Firm
The Role of Market Forces in Assuring Contractual Performance
| Citations per year | 0.35 |
|---|---|
| Citation span | 2003 - 2026 (24) |
| Highly cited | No |