Reputation, honesty, and cheating in informal milk markets in India

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SAFE Working Paper ; No. 134

Classification and Topics

• Classification: Wirtschaft ; Field Experiments ; Microeconomics: General ; Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products ; Sustainable Development
• Subject: Cheating ; informal sector ; reputation ; norms of honesty ; milk markets ; India

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kröll, Markus ; Rustagi, Devesh
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe
• (where): Frankfurt a. M.
• (when): 2017

Further information

• DOI: doi:10.2139/ssrn.2982365
• Handle: http://hdl.handle.net/10419/203298
• Last update: 10.03.2025, 11:41 AM CET