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A Theory of Credibility

A Theory of Credibility Abstract This paper presents models in which one agent must decide whether to trust another, whose motives are uncertain. Reliability can only be communicated through actions. In this context, it pays for people to build a reputation based on reliable behaviour; someone becomes credible by consistently providing accurate and valuable information or by performing useful services. The theory provides a justification for long-term arrangements without binding contracts. It also describes those situations where it pays an agent to cash in on his reputation. This content is only available as a PDF. © 1985 The Society for Economic Analysis Limited http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Economic Studies Oxford University Press

A Theory of Credibility

The Review of Economic Studies , Volume 52 (4) – Oct 1, 1985

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References (11)

Publisher
Oxford University Press
Copyright
© 1985 The Society for Economic Analysis Limited
ISSN
0034-6527
eISSN
1467-937X
DOI
10.2307/2297732
Publisher site
See Article on Publisher Site

Abstract

Abstract This paper presents models in which one agent must decide whether to trust another, whose motives are uncertain. Reliability can only be communicated through actions. In this context, it pays for people to build a reputation based on reliable behaviour; someone becomes credible by consistently providing accurate and valuable information or by performing useful services. The theory provides a justification for long-term arrangements without binding contracts. It also describes those situations where it pays an agent to cash in on his reputation. This content is only available as a PDF. © 1985 The Society for Economic Analysis Limited

Journal

The Review of Economic StudiesOxford University Press

Published: Oct 1, 1985

There are no references for this article.