Comments (1)
This paper’s principal finding is that reputation mechanisms can induce higher cooperation and efficiency if, instead of publishing new ratings as soon as they are received, they only update a trader’s public reputation profile every k transactions with a summary statistic of a trader’s last ratings. In settings with noise, infrequent updating increases efficiency because it decreases the adverse consequence of spurious negative ratings. At the same time, however, infrequent updating increases a seller’s short-term profits from cheating and thus the minimum future punishment threat that can sustain cooperation
from dissertation.
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from dissertation.