Horizontal Reputation and Strategic Audience Management

52 Pages Posted: 19 Oct 2015 Last revised: 23 Jan 2018

See all articles by Matthieu Bouvard

Matthieu Bouvard

McGill University - Desautels Faculty of Management

Raphaël Levy

University of Mannheim - Department of Economics

Date Written: October 1, 2017

Abstract

We study how a decision maker uses his reputation to simultaneously influence the actions of multiple receivers with heterogenous biases. The reputational payoff is single-peaked around a bliss reputation at which the incentives of the average receiver are perfectly aligned. We evidence two equilibria characterized by repositioning towards this bliss reputation that only differ through a multiplier capturing the efficiency of reputational incentives. Repositioning is moderate in the more efficient equilibrium, but the less efficient equilibrium features overreactions, and welfare may then get lower than in the no-reputation case. Finally, we highlight how strategic audience management (e.g., delegation to third parties with dissenting objectives, centralization) alleviates inefficient reputational incentives, and how multiple organizational or institutional structures may arise in equilibrium as a result.

Keywords: Career Concerns, Multi-sided Reputation, Endogenous Audiences

JEL Classification: D8, L14

Suggested Citation

Bouvard, Matthieu and Levy, Raphaël, Horizontal Reputation and Strategic Audience Management (October 1, 2017). Available at SSRN: https://ssrn.com/abstract=2676045 or http://dx.doi.org/10.2139/ssrn.2676045

Matthieu Bouvard

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, Quebec H3A1G5 H3A 2M1
Canada

Raphaël Levy (Contact Author)

University of Mannheim - Department of Economics ( email )

D-68131 Mannheim
Germany

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