Neel Krishnaswami has some very interesting views in response to an article by Natalie Solent in Samizdata yesterday regarding the value, nature and possible future understanding of personal reputation:
I don’t think things will play out like this. Reputation is already extraordinarily important in determining whether you can get a bank loan or a credit card: it’s just that we call reputation a “credit rating”. Notice how this is different from the traditional notion of reputation: it’s highly specialized, with only the income and repayment habits of the person listed on it. It doesn’t matter whether one is a communist or libertarian, a Bible-thumping evangelical or an anal-fisting disco raver.
In the future, technology will enable people to create even more fine-grained ‘reputational’ judgements: the combination of computers and networking means that (in principle) one can look up every neighborhood someone has lived in and discover the price, or what magazines you have subscribed to since college, and which brands of shampoo you buy and when. This will increase economic efficiency, through the futuristic equivalent of targeted marketing, only the target niche is a niche of one consumer. These benefits won’t be captured by consumers, though because it enables firms to indulge in pricing behavior a bit closer to perfect price discrimination (eg, if you will only drink Coke and not Pepsi, then the price you pay for Coke might be increased — just for you!)
However, this is likely to be counterbalanced in two ways. First, ubiquitous networking means that price competition will get a lot fiercer. Second, people will also be able to use public-key cryptography to create multiple network identities, each of which has its own set of reputations associated with it. So you could create “sober citizen” and “wild-eyed radical” personas, independent of one another.
Two really good books on this subject are the collection Reputation: Studies in the Voluntary Elicitation of Good Conduct (Daniel B. Klein, ed) and Information Rules (by Carl Shapiro and Hal R. Varian). The first is really essential reading for any libertarian who wants to see how voluntarist organizations work and also how they don’t — it has a beautiful mix of theory and case studies.
