On Reputation - A Microfoundation of Contract Enforcement and Price Rigidity

Détails

ID Serval
serval:BIB_C3A545F769A4
Type
Article: article d'un périodique ou d'un magazine.
Collection
Publications
Institution
Titre
On Reputation - A Microfoundation of Contract Enforcement and Price Rigidity
Périodique
The Economic Journal
Auteur⸱e⸱s
Fehr E., Brown M., Zehnder C.
ISSN
0013-0133
Statut éditorial
Publié
Date de publication
03/2009
Peer-reviewed
Oui
Volume
119
Numéro
536
Pages
333-353
Langue
anglais
Résumé
We study the impact of reputational incentives in markets characterised by moral hazard problems. Social preferences have been shown to enhance contract enforcement in these markets, while at the same time generating considerable wage and price rigidity. Reputation powerfully amplifies the positive effects of social preferences on contract enforcement by increasing contract efficiency substantially. This effect is, however, associated with a considerable bilateralisation of market interactions, suggesting that it may aggravate price rigidities. Surprisingly, reputation in fact weakens the wage and price rigidities arising from social preferences. Thus, in markets characterised by moral hazard, reputational incentives unambiguously increase mutually beneficial exchanges, reduce rents, and render markets more responsive to supply and demand shocks.
Web of science
Création de la notice
16/09/2008 9:16
Dernière modification de la notice
20/08/2019 15:38
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