Reputation and Competition among Information Intermediaries

Session ID 178: ReputationsThis paper investigates the e¤ect of competition on the reputation mechanism in the market for information intermediaries such as rating agencies. I use a dynamic model to endogenize the value of reputation to enable comparison of equilibria under di¤erent market structures. Behav- ior is determined in the model by weighing the current rating fee against the future value the rating agency derives from enjoying a good reputa- tion. I show that competition weakens the reputation mechanism, and thus worsens the quality of information by reducing the value of a good reputation but not the short-term gain of lying.published_or_final_versio