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Impermanent types and permanent reputations

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  • Ekmekci, Mehmet
  • Gossner, Olivier
  • Wilson, Andrea

Abstract

We study the impact of unobservable stochastic replacements for the long-run player in the classical reputation model with a long-run player and a series of short-run players. We provide explicit lower bounds on the Nash equilibrium payoffs of a long-run player, both ex-ante and following any positive probability history. Under general conditions on the convergence rates of the discount factor to one and of the rate of replacement to zero, both bounds converge to the Stackelberg payoff if the type space is sufficiently rich. These limiting conditions hold in particular if the game is played very frequently.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 147 (2012)
Issue (Month): 1 ()
Pages: 162-178

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Handle: RePEc:eee:jetheo:v:147:y:2012:i:1:p:162-178

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Web page: http://www.elsevier.com/locate/inca/622869

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Keywords: Reputation; Repeated games; Impermanent types;

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References

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  1. Mailath, George J & Samuelson, Larry, 2001. "Who Wants a Good Reputation?," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 415-41, April.
  2. Martin W. Cripps & George J. Mailath & Larry Samuelson, 2004. "Disappearing Private Reputations in Long-Run Relationships," PIER Working Paper Archive 04-008, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  3. Drew Fudenberg & David Levine, 1987. "Reputation and Equilibrium Selection in Games With a Patient Player," Working papers 461, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Cripps,M.W. & Mailath,G.J. & Samuelson,L., 2002. "Imperfect monitoring and impermanent reputations," Working papers 17, Wisconsin Madison - Social Systems.
  5. Wiseman, Thomas, 2009. "Reputation and exogenous private learning," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1352-1357, May.
  6. Wiseman, Thomas, 2008. "Reputation and impermanent types," Games and Economic Behavior, Elsevier, vol. 62(1), pages 190-210, January.
  7. Sorin, Sylvain, 1999. "Merging, Reputation, and Repeated Games with Incomplete Information," Games and Economic Behavior, Elsevier, vol. 29(1-2), pages 274-308, October.
  8. Phelan, Christopher, 2006. "Public trust and government betrayal," Journal of Economic Theory, Elsevier, vol. 130(1), pages 27-43, September.
  9. Harold L. Cole & James Dow & William B. English, 1994. "Default, settlement, and signalling: lending resumption in a reputational model of sovereign debt," Staff Report 180, Federal Reserve Bank of Minneapolis.
  10. Fudenberg, Drew & Levine, David K, 1992. "Maintaining a Reputation When Strategies Are Imperfectly Observed," Review of Economic Studies, Wiley Blackwell, vol. 59(3), pages 561-79, July.
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  12. Bar-Isaac, Heski & Tadelis, Steven, 2008. "Seller Reputation," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(4), pages 273-351, August.
  13. Ekmekci, Mehmet, 2011. "Sustainable reputations with rating systems," Journal of Economic Theory, Elsevier, vol. 146(2), pages 479-503, March.
  14. Bernardita Vial, 2008. "Competitive Equilibrium and Reputation under Imperfect Public Monitoring," Documentos de Trabajo 327, Instituto de Economia. Pontificia Universidad Católica de Chile..
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  16. David Kreps & Robert Wilson, 1999. "Reputation and Imperfect Information," Levine's Working Paper Archive 238, David K. Levine.
  17. Gossner, Olivier & Tomala, Tristan, 2008. "Entropy Bounds on Bayesian Learning," Economics Papers from University Paris Dauphine 123456789/6067, Paris Dauphine University.
  18. Aumann, Robert J. & Sorin, Sylvain, 1989. "Cooperation and bounded recall," Games and Economic Behavior, Elsevier, vol. 1(1), pages 5-39, March.
  19. Mailath, George J & Samuelson, Larry, 2001. "Who Wants a Good Reputation? Erratum," Review of Economic Studies, Wiley Blackwell, vol. 68(3), pages 714, July.
  20. Gossner, Olivier & Tomala, Tristan, 2008. "Entropy bounds on Bayesian learning," Journal of Mathematical Economics, Elsevier, vol. 44(1), pages 24-32, January.
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Citations

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Cited by:
  1. Daron Acemoglu & Alexander Wolitzky, 2012. "Cycles of Distrust: An Economic Model," NBER Working Papers 18257, National Bureau of Economic Research, Inc.
  2. Rick Harbaugh & Ted To, 2008. "Opportunistic Discrimination," Working Papers 2008-07, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  3. Renault, Jerome & Solan, Eilon & Vieille, Nicolas, 2012. "Dynamic Sender-Receiver Games," Les Cahiers de Recherche 966, HEC Paris.
  4. Ju Hu, 2013. "Reputation in the Presence of Noisy Exogenous Learning," PIER Working Paper Archive 13-009, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.

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