Econometrica: Nov 2013, Volume 81, Issue 6
Reputation for Quality
Simon Board, Moritz Meyer‐ter‐VehnWe propose a model of firm reputation in which a firm can invest or disinvest in product quality and the firm's reputation is defined as the market's belief about this quality. We analyze the relationship between a firm's reputation and its investment incentives, and derive implications for reputational dynamics.
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