IR SEMINAR SERIES - Ekrem Başer

Reputational concerns can constrain states from violating foreign investors’ property rights. But who values its reputation more—a state with an already stellar or damaged reputation? Via a formal model, I argue that better reputations increase the temptation to take advantage of the trust they generate among investors. The empirical challenge is that non-reputational mechanisms can also constrain states’ temptations: these have good reputations but cannot take advantage of them. Naive comparisons should find better reputations to correlate negatively with contract breach, contrasting my argument. As a solution, I consider how natural disasters affect reputation dynamics...