Reputation formation with competitive investors

Abraham M, Grimm V, Neeß C, Seebauer M (2018)

Publication Language: English

Publication Type: Other publication type

Publication year: 2018


We investigate patterns of information transmission and its effects on transfer and return rates in a standard investment game where investors compete in a tournament and costless reputational information about responders can be exchanged between individual investors within a population but does not become public. We vary the nature of information that could be transmitted (either a subjective rating or the objective details of a transaction) and compare the level of information exchange to a treatment without competition among investors. We find that competition among investors decreases information transmission substantially and significantly, but the nature of information only affects information transmission decisions without competition. When investors compete they exhibit lower transfer rates and profits, while responders return lower rates and are only able to significantly increase their profits when information is objective. We find evidence that in a competitive environment investors deliberately use subjective information to mislead their competitors.

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Abraham, M., Grimm, V., Neeß, C., & Seebauer, M. (2018). Reputation formation with competitive investors.


Abraham, Martin, et al. Reputation formation with competitive investors. 2018.

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