@techreport{Fainmessery2011Bilateral,
abstract = {We present a model of repeated games in large buyer-seller networks in the presence of reputation networks via which buyers share information about past transactions. The model allows us to characterize cooperation networks - networks in which each seller cooperates (by providing high quality goods) with every buyer that is connected to her. To this end, we provide conditions under which: [1] the incentives of a seller s to cooperate depend only on her beliefs with respect to her local neighborhood - a subnetwork that includes seller s and is of a size that is independent of the size of the entire network; and [2] the incentives of a seller s to cooperate can be calculated as if the network was a random tree with seller s at its root. Our characterization sheds light on the welfare costs of relying only on repeated interactions for sustaining cooperation, and on how to mitigate such costs.},
address = {Providence, RI},
author = {Itay P. Fainmessery and David A. Goldberg},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {330; networks; moral hazard; graph theory; repeated games},
language = {eng},
number = {2011-2},
publisher = {Brown Univ., Dep. of Economics},
title = {Bilateral and community enforcement in a networked market with simple strategies},
type = {Working Paper, Brown University, Department of Economics},
url = {http://hdl.handle.net/10419/62660},
year = {2011}
}
