It makes sense to me. Reputation offers a persistent opportunity for rent seeking. Eventually, someone will attempt to capitalize on that and they'll start outcompeting their peers, which triggers a race to the bottom.

That's why I wondered about the case of private issuers of actual precious metal coinage. Reputation plays a much smaller role there, although they still need people to believe their purity claims.

Undisciplined

BooksAndArticles

Competition and trust in the private provision of money | Article Review

SimpleStacker

Yes.  I think the contribution was considering whether or not there are dynamic reputation strategies that could lead to an efficient outcome even without full commitment, and the answer is no.  That part was a bit over my head though.