Repetition and Reputation: Implications for Trust and Trustworthiness in the Short and in the Long Run

12 Pages Posted: 6 Feb 2004

See all articles by Iris Bohnet

Iris Bohnet

Harvard University - Harvard Kennedy School (HKS)

Steffen Huck

University College London - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Date Written: November 2003

Abstract

Repeat transactions are not necessarily the rule in today's global economy. Indirect reputation systems, where buyers base their decisions on a seller's previous interactions with other buyers, are a potential substitute for personal interactions - provided such information is available. This paper examines experimentally to what degree indirect reputation building substitutes for direct reputation building in repeat interactions in the short run and analyzes the effects these environments have on behavior in the long run. We find that repeat interactions are the most effective institutional arrangement to foster trust and trustworthiness in the short and in the long run.

Keywords: Economics, Microeconomics

JEL Classification: D11

Suggested Citation

Bohnet, Iris and Huck, Steffen, Repetition and Reputation: Implications for Trust and Trustworthiness in the Short and in the Long Run (November 2003). KSG Working Paper No. RWP03-048. Available at SSRN: https://ssrn.com/abstract=474544 or http://dx.doi.org/10.2139/ssrn.474544

Iris Bohnet (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-5605 (Phone)
617-496-5747 (Fax)

Steffen Huck

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
+44 207 679 5895 (Phone)
+44 207 916 2774 (Fax)

HOME PAGE: http://www.ucl.ac.uk/~uctpshu/

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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