Cheap Talk and Reputation in Repeated Pretrial Negotiation
AbstractInfinitely repeated interaction between a defendant and a plaintiff can enhance the credibility of cheap talk and improve efficiency in outcomes that would be feasible without cheap talk. The basic driving force is reputation effect. If t he players are concerned about their reputation, cheap talk cannot be taken as meaningless even in a game where the interests of the players are sufficiently conflicting, because possible current gains from opportunistic behavior can be wiped out by future losses in payoff from damaged.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 27 (1996)
Issue (Month): 4 (Winter)
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- Hanjoon Michael Jung, 2008. "Paradox of Credibility," Microeconomics Working Papers 22267, East Asian Bureau of Economic Research.
- Jung, Hanjoon Michael, 2008. "Paradox of Credibility," MPRA Paper 7443, University Library of Munich, Germany.
- LI, Ming & MYLOVANOV, Tymofiy, 2010.
"Credibility for Sale - The Effect of Disclosure on Information Acquisition and Transmission,"
Cahiers de recherche
08-2010, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Li, Ming & Tymofiy Mylovanov, 2009. "Credibility for Sale: the Effect of Disclosure on Information Acquisition and Transmission," Working Papers 09008, Concordia University, Department of Economics, revised Oct 2009.
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