This introductory chapter begins with a brief description of the “index of reputation” on eBay, consisting of feedbacks from buyers and sellers, which effectively prevents cheating on both sides. The case of eBay suggests two issues that will be encountered over and over again in the analysis of public governance. First, reputational considerations may induce people to act in useful ways even without the presence of a formal institution threatening to punish them should they misbehave. Secondly, the success of eBay hinges upon the presence of a communication technology: Internet and the Web. In general, all solutions to governance problems need appropriate technologies in order to function. The chapter also discusses the two main beneficial effects of reputation: “static” and “dynamic”. The example of open-source software production is used to illustrate the complex relation between reputational incentives, their nature, and some key characteristics of governance. Examples of public governance where reputational incentives are relevant are also considered.
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