Markets collapse when opportunistic behavior saps the efficiency of cooperation: once the environment becomes too adversarial and trust is diminished, collaboration is no longer profitable.
Source quote, verbatim
when the efficiency of cooperation is sapped by opportunistic behavior. When the environment becomes too adversarial, when trust is diminished, collaboration is no longer profitable. The market collapses.
From
Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021), Chapter. Reputation, p. 2 https://ssrn.com/abstract=3782210 · source PDF
Cite as
Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210
Holds when
markets with significant information asymmetries
environments permitting a wide variety of strategies
extendskaal:claim:3373393-007 Agency problems originate from the lack of trust between principals and agents, which itself stems from inform...
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