Reputation-building is a deliberate investment of foregone gains

Evidence

I think this is the right sort of framework to capture the idea that people invest resources for the purpose of building a reputation for honesty. The gains from honest behaviour are built directly into the model. The fact that the dishonest salesman builds his reputation by going against his short-term interests is an important feature to highlight. This is his investment. — Diego Gambetta, Trust - Making and Breaking Cooperative…, 1005

Categorization

Category: Definitional Content

• XREF: Defines ‘reputation as investment’ — a precise economic meaning of trust formation useful for the Luhmann/Hardin synthesis.

Related

• Reputation for honesty is built through costly investment against short-term interests (similarity 0.90)
• Reputation means changing beliefs, not merely incentive-compatible behavior (similarity 0.88)
• Reputation building requires sacrificing short-term gains for future returns (similarity 0.87)
• Reputation is a public inference of disposition from background and behavior (similarity 0.84)
• One can invest only in reputation, never directly in trustworthiness (similarity 0.83)
• Reputation is the public inference of another’s qualities from imperfect observed data (similarity 0.83)
• A reputation for honesty accumulates slowly but can be destroyed rapidly (similarity 0.82)
• Pure reputation models collapse because dishonest actors can mimic honest behavior perfectly (similarity 0.81)
• Building an honesty reputation requires each act be recorded and observable by future partners (similarity 0.81)
• Reputation is a public inference from visible data to hidden disposition (similarity 0.81)
• Reputations work as future-oriented constraints that bind their holders (similarity 0.80)
• Reputation functions as a commodity that assures others one will honor commitments (similarity 0.80)
• Only incentives, not investment, can genuinely change trustworthiness. (similarity 0.80)
• Acting on mistaken assumptions about reputation can still yield trust (similarity 0.79)
• A trustworthy reputation can be exploited because it is imperfectly known (similarity 0.79)

Broader Connections

• Authority, reputation, and leadership are generalized motives for accepting influence #expands (0.80) — Niklas Luhmann, Trust and Power, 734