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Reputation in Dynamic Games

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  • Celentani, Marco
  • Pesendorfer, Wolfgang

Abstract

We consider an infinite dynamic game played by one large player and a large number of small players. State variables are allowed, and public histories include only the play of the large player, the aggregate play of the small players and the aggregate state variable. We use a reputational argument that restricts the set of equilibria to profiles that give the large player almost what he could get by committing to an optimal strategy as his discount factor approaches 1. Furthermore we identify a class of dynamic games where this result holds even if the small players' discount factor also approaches 1.

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Bibliographic Info

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

Volume (Year): 70 (1996)
Issue (Month): 1 (July)
Pages: 109-132

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Handle: RePEc:eee:jetheo:v:70:y:1996:i:1:p:109-132

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

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References

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  1. D. Fudenberg & David K. Levine, 1989. "Reputation and Equilibrium Selection in Games with a Patient Player," Levine's Working Paper Archive 508, David K. Levine.
  2. Cripps, Martin W & Thomas, Jonathan P, 1995. "Reputation and Commitment in Two-Person Repeated Games without Discounting," Econometrica, Econometric Society, Econometric Society, vol. 63(6), pages 1401-19, November.
  3. repec:fth:coluec:565 is not listed on IDEAS
  4. Schmidt, Klaus M., 1993. "Reputation and Equilibrium Characterization in Repeated Games with Conflicting Interests," Munich Reprints in Economics, University of Munich, Department of Economics 3395, University of Munich, Department of Economics.
  5. Larry M. Ausubel & Raymond J. Deneckere, 1989. "Reputation in Bargaining and Durable Goods Monopoly," Levine's Working Paper Archive 201, David K. Levine.
  6. Ausubel, Lawrence M & Deneckere, Raymond J, 1989. "Reputation in Bargaining and Durable Goods Monopoly," Econometrica, Econometric Society, Econometric Society, vol. 57(3), pages 511-31, May.
  7. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 85(3), pages 473-91, June.
  8. Gul, Faruk & Sonnenschein, Hugo & Wilson, Robert, 1986. "Foundations of dynamic monopoly and the coase conjecture," Journal of Economic Theory, Elsevier, Elsevier, vol. 39(1), pages 155-190, June.
  9. Cripps, M.W. & Thomas, J.P., 1992. "Reputation and commitment in two-person repeated games," Discussion Paper, Tilburg University, Center for Economic Research 1992-10, Tilburg University, Center for Economic Research.
  10. V. V. Chari & Patrick J Kehoe, 1998. "Sustainable Plans," Levine's Working Paper Archive 600, David K. Levine.
  11. Paul Milgrom & John Roberts, 1980. "Predation, Reputation, and Entry Deterrence," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 427, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  12. Eddie Dekel and Joseph Farrell., 1990. "One-Sided Patience with One-Sided Communication Does Not Justify Stackelberg Equilibrium," Economics Working Papers, University of California at Berkeley 90-136, University of California at Berkeley.
  13. Drew Fudenberg & David K. Levine & Jean Tirole, 1985. "Infinite-Horizon Models of Bargaining with One-Sided Incomplete Information," Levine's Working Paper Archive 1098, David K. Levine.
  14. Kydland, Finn E. & Prescott, Edward C., 1980. "Dynamic optimal taxation, rational expectations and optimal control," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 2(1), pages 79-91, May.
  15. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, Elsevier, vol. 27(2), pages 253-279, August.
  16. Dutta, P.K., 1991. "A Folk Theorem for Stochastic Games," RCER Working Papers 293, University of Rochester - Center for Economic Research (RCER).
  17. Fischer, Stanley, 1980. "Dynamic inconsistency, cooperation and the benevolent dissembling government," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 2(1), pages 93-107, May.
  18. Nancy L. Stokey, 1981. "Rational Expectations and Durable Goods Pricing," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 12(1), pages 112-128, Spring.
  19. Coase, Ronald H, 1972. "Durability and Monopoly," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 15(1), pages 143-49, April.
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Citations

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Cited by:
  1. Peter J. Hammond & Yeneng Sun, 2000. "Joint Measurability and the One-way Fubini Property for a Continuum of Independent Random Variables," Working Papers, Stanford University, Department of Economics 00008, Stanford University, Department of Economics.
  2. Marco Celentani & Drew Fudenberg & David K Levine & Wolfgang Pesendorfer, 2006. "Maintaining A Reputation Against A Patient Opponent," Levine's Working Paper Archive 699152000000000019, David K. Levine.
  3. Christopher Phelan, 2001. "Public trust and government betrayal," Staff Report, Federal Reserve Bank of Minneapolis 283, Federal Reserve Bank of Minneapolis.
  4. Blundell,Richard & Newey,Whitney K. & Persson,Torsten (ed.), 2006. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521692083, 9.
  5. Drew Fudenberg, 1995. "When Are Non-Anonymous Players Negligible?," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1114, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Alessandro Riboni, 2010. "Committees As Substitutes For Commitment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(1), pages 213-236, 02.
  7. Celentani, Marco, et al, 1996. "Maintaining a Reputation against a Long-Lived Opponent," Econometrica, Econometric Society, Econometric Society, vol. 64(3), pages 691-704, May.
  8. Phelan, Christopher, 2006. "Public trust and government betrayal," Journal of Economic Theory, Elsevier, Elsevier, vol. 130(1), pages 27-43, September.
  9. Wolfgang Pesendorfer & David Levine, 1992. "When are Agents Negligible?," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1018, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. Modesto, Leonor & Thomas, Jonathan P., 2001. "An analysis of labour adjustment costs in unionized economies," Labour Economics, Elsevier, Elsevier, vol. 8(4), pages 475-501, September.
  11. Sorin, Sylvain, 1999. "Merging, Reputation, and Repeated Games with Incomplete Information," Games and Economic Behavior, Elsevier, vol. 29(1-2), pages 274-308, October.

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