Misconduct and Reputation under Imperfect Information

Abstract

Misconduct—market actions that are unethical and indicative of fraud—is a significant yet poorly understood issue that underlies many economic transactions. We design a field experiment to study the impact of two-sided antimisconduct information programs, which we deploy on the local markets for mobile money (“human ATMs”) in Ghana. The programs lead to a large reduction in misconduct ( − 2 1 ⁢ p e r c e n t a g e p o i n t s = − 7 2 % −21 ⁢ percentage points = −72 % ) and, as a result, broader improvements in overall market activity, consumer welfare, and firm revenue. We show the treatment effect is due to a combination of more accurate consumer beliefs about misconduct and increased vendor reputation concerns.