Competition among traders makes reputation equilibrium selection hard to prove formally

Evidence

I have assumed a single salesman in the model. But there are usually many sellers in the world, some of whom are honest, some dishonest. And of course there are many customers. Chance events may set off transactions among some protagonists, the associated sellers embarking on the acquisition of reputation, while others —- some of whom are truly honest — are left by the wayside for want of customers. It seems plausible to suppose that if a record is kept of salesmen’s past behaviour (say through word of mouth) customers will gravitate towards salesmen with a good track record. But I do not know how to prove it. — Diego Gambetta, Trust - Making and Breaking Cooperative…, 1009

Categorization

• XREF: Word-of-mouth track records are exactly the monitoring-information channel that blindness destroys in Saramago — connection to the observability thesis.