Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/203298 
Year of Publication: 
2017
Series/Report no.: 
SAFE Working Paper No. 134
Version Description: 
[Date Written: June 7, 2017]
Publisher: 
Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe, Frankfurt a. M.
Abstract: 
Sellers display astounding differences in their cheating behavior, even in developing countries with weak enforcement of rules. Using the context of informal milk markets in India, we examine the role of reputation and norms of honesty as potential explanations. Our results show that individuals cannot verify milk quality, which weakens the scope of reputation-based mechanisms. But a strong correlation exists between milk quality and norms of honesty, measured using a novel behavioral experiment. Price collusion allows for the coexistence of honest and dishonest milkmen within a market. Norms of honesty can mitigate market inefficiency under the right institutional environment.
Subjects: 
Cheating
informal sector
reputation
norms of honesty
milk markets
India
JEL: 
C93
D00
O13
Q01
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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