The reputation economy and government

We’re all familiar with the concrept of reputation and how in a world of social networks, voting and rank, it’s becoming increasingly important.

That’s not, however, to say that it’s a new concept. Information asymmetry in commerce is a centuries old problem. Solving it through reputation is equally ancient. We may associate eBay with our modern definition of online reputation but the concept is perhaps earliest associated by archival records of trading between Maghribi merchants in the 11the century. Research on these early economic transactions show that the key to curtailing “opportunistic behaviour and promoting trust between agents” in an environment of high information asymmetry was a system of reputations that was developed and shared between the agents within a trading coalition or network.

Like on eBay, success for the seller rested upon the fear of exclusion from the trading network – thus promoting honest behaviour and fair trading amongst Maghribi merchants.

Fast forward to today and we’re all aware of the use of rankings and feedbacks to vet the quality of a buyer or seller on eBay, or rank the quality of submissions from participants in communities like Wikipedia, Sermo or World of Warcraft.

But can we take this concept of applying cheap and available reputation information to offset quality and reliability problems in Government?

This concept of information asymmetry can perhaps be applied to the relationship between governing and governed. A citizen votes and pays their taxes but their ability to see into the machine, and provide feedback, is quite limited. And if services fall short of expectations there is likely no tangible recourse for this citizen. So how do “lemons” get judged in such an environment, in particular in environments with little to no competition?

Ultimately, one can vote to change governments due to dissatisfaction, but this occurs at a much more macro level than the day-to-day transactions that account for the highest share of governed/governing touchpoints. Moreover, as a highly placed Federal government colleague told us on the topic of innovation: “Our incentives for change are very different – we aren’t going to go out of business anytime soon.”

Indeed, the bottom line is unlikely to motivate better customer service in these front-line government relationships. But what will? And might some type of transparent reputational index around service delivery satisfaction be part of the answer? Could a system like TheyWorkForYou be adapted for externally facing service delivery with reputation and ranking added to the system? Or could incentives be attached to the feedback and rankings developed at sites such as Patient Opinion to incent change? Where else might this be applied.

I’d love to hear your thoughts.

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