(Bad) reputation in relational contracting

• 成果类型: Article
• 署名作者: Deb, Rahul; Mitchell, Matthew; Pai, Mallesh M.
• 署名单位: University of Toronto; University of Toronto; Rice University
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE4803
• 发表日期: 2022-05-01
• 页码: 763-800
• 关键词: Expert advice; bad reputation; strategic experimentation; bandits; relational contracting; D82; D86

摘要

Motivated by markets for expertise, we study a bandit model where a principal chooses between a safe and risky arm. A strategic agent controls the risky arm and privately knows whether its type is high or low. Irrespective of type, the agent wants to maximize duration of experimentation with the risky arm. However, only the high type arm can generate value for the principal. Our main insight is that reputational incentives can be exceedingly strong unless both players coordinate on maximally inefficient strategies on path. We discuss implications for online content markets, term limits for politicians, and experts in organizations.