This is the Cato Daily Podcast for Wednesday, March 11, 2015.

I'm Caleb Brown. The way markets use reputation is rapidly evolving.

New technologies now allow you to efficiently turn your good reputation into income.

Max Borders, editor of The Freeman, spoke with me about the importance of reputational capital

at the International Students for Liberty Conference held last month.

In probably more obscure economics, there's this idea that with repeat dealings with other people,

it's important to gain reputation capital,

which is this idea that when I see you and I trade with you,

I want to be able to trust you and we gain that trust

through reputation of you know other people what they know about you and so on what you

know about me that sort of lubricates the exchanges and cooperation that you and I might have.

So we want to build that reputation capital up over time because we want to succeed at our various pursuits and it takes trust to do that.

So the opposite side of that in my mind is like a hot dog cart in Tijuana Mexico.

Mm-hmm because you're like a hot dog cart in Tijuana, Mexico.

Because you're never going to go back.

Right, right.

And, you know, maybe the hot dog cart person still wants that reputation capital for that area.

So if you are a Spanish speaker in that area, you might say, look, to someone else, maybe to another competitor or another person at the

villa by the beach or wherever it is, look, this guy serves nasty hot dogs

and he certainly doesn't want that reputation capital

because these communities can be small, close-knit,

and their business depends on good reputation.

...