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Title:Losing face PDF Logo
Authors:Hugh-Jones, David
Reinstein, David
Issue Date:2010
Series/Report no.:Jena economic research papers 2010,068
Abstract:When person A makes an offer to person B and B rejects it, then A may lose face. This loss of face is assumed to occur only if B knows for sure of A's offer. While under some circumstances loss of face can be rationalized by the consequences for future reputation, it may also enter directly into the utility function. Loss of face concerns can lead to fewer offers and ineffeciency in markets that involve matching, discrete transactions, and offers/proposals in both directions, such as the marriage market, certain types of labor markets, admissions to colleges and universities, and joint ventures and collaborations. We offer a simple model of this, and show that under some circumstances welfare can be improved by a mechanism that only reveals offers when both parties say yes.
Subjects:matching
marriage markets
anonymity
reputation
adverse selection
Bayesian games
emotions
JEL:D83
D03
Document Type:Working Paper
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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