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When is Reputation Bad

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Author Info

  • Jeffrey Ely
  • Drew Fudenberg
  • David K Levine

Abstract

In traditional reputation models, the ability to build a reputation is good for the long-run player. In [Ely, J., Valimaki, J., 2003. Bad reputation. NAJ Econ. 4, 2; http://www.najecon.org/v4.htm. Quart. J. Econ. 118 (2003) 785-814], Ely and Valimaki give an example in which reputation is unambiguously bad. This paper characterizes a class of games in which that insight holds. The key to bad reputation is that participation is optional for the short-run players, and that every action of the long-run player that makes the short-run players want to participate has a chance of being interpreted as a signal that the long-run player is "bad." We allow a broad set of commitment types, allowing many types, including the "Stackelberg type" used to prove positive results on reputation. Although reputation need not be bad if the probability of the Stackelberg type is too high, the relative probability of the Stackelberg type can be high when all commitment types are unlikely.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 618897000000000016.

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Date of creation: 08 Apr 2005
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Handle: RePEc:cla:levarc:618897000000000016

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Web page: http://www.dklevine.com/

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References

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  1. 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.
  2. George J. Mailath & Larry Samuelson, . ""Who Wants a Good Reputation?''," CARESS Working Papres 98-12, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  3. Fudenberg, D. & Levine, D.K. & Maskin, E., 1989. "The Folk Theorem With Inperfect Public Information," Working papers 523, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Fudenberg, D., 1991. "Maintaining a Reputation when Strategies are Imperfectly Observed," Working papers 589, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Jeffrey C. Ely & Juuso Valimaki, 2002. "Bad Reputation," Discussion Papers 1348, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Marco Celentani & Drew Fudenberg & David K. Levine & Wolfgang Pesendorfer, 1996. "Maintaining a Reputation against a Patient Opponent," Levine's Working Paper Archive 2015, David K. Levine.
  7. D. Fudenberg & D. M. Kreps & E. Maskin, 1998. "Repeated Games with Long-run and Short-run Players," Levine's Working Paper Archive 608, David K. Levine.
  8. Marco Celentani, 1993. "Maintaining a Reputation Against A Long-Lived Opponent," Discussion Papers 1075R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, vol. 27(2), pages 280-312, August.
  10. Sorin, Sylvain, 1999. "Merging, Reputation, and Repeated Games with Incomplete Information," Games and Economic Behavior, Elsevier, vol. 29(1-2), pages 274-308, October.
  11. Stephen Morris, 1999. "Political Correctness," Cowles Foundation Discussion Papers 1242, Cowles Foundation for Research in Economics, Yale University.
  12. Fudenberg, D. & Levine, D.K., 1991. "Efficiency and Obsevability with Long-Run and Short-Run Players," Working papers 591, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Mailath,G.J. & Samuelson,L., 1998. "Your reputation is who you're not, not who you'd like to be," Working papers 18, Wisconsin Madison - Social Systems.
  14. Fudenberg, Drew & Kreps, David M, 1987. "Reputation in the Simultaneous Play of Multiple Opponents," Review of Economic Studies, Wiley Blackwell, vol. 54(4), pages 541-68, October.
  15. David Kreps & Robert Wilson, 1999. "Reputation and Imperfect Information," Levine's Working Paper Archive 238, David K. Levine.
  16. Mailath, George J & Samuelson, Larry, 2001. "Who Wants a Good Reputation? Erratum," Review of Economic Studies, Wiley Blackwell, vol. 68(3), pages 714, July.
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Citations

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Cited by:
  1. Takahashi, Satoru & Levine, David & Fudenberg, Drew, 2007. "Perfect Public Equilibrium When Players Are Patient," Scholarly Articles 3196336, Harvard University Department of Economics.
  2. Matthew Gentzkow & Jesse M. Shapiro, 2006. "Media Bias and Reputation," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 280-316, April.
  3. Van Gorder, Robert A. & Caputo, Michael R., 2010. "Envelope theorems for locally differentiable open-loop Stackelberg equilibria of finite horizon differential games," Journal of Economic Dynamics and Control, Elsevier, vol. 34(6), pages 1123-1139, June.
  4. Alexander Frankel & Michael Schwarz, 2009. "Experts and Their Records," NBER Working Papers 14921, National Bureau of Economic Research, Inc.
  5. Dasgupta, Amil & Sarafidis, Yianis, 2009. "Managers as administrators: Reputation and incentives," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 155-163, May.
  6. Aperjis, Christina & Miao, Yali & Zeckhauser, Richard Jay, 2011. "Variable Temptations and Black Mark Reputations," Scholarly Articles 5027138, Harvard Kennedy School of Government.
  7. Andrea Prat, 2005. "The Wrong Kind of Transparency," American Economic Review, American Economic Association, vol. 95(3), pages 862-877, June.
  8. Zuazo Gain, Peio, 2014. "Uncertain Information Structures and Backward Induction," IKERLANAK Ikerlanak;2014-79, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
  9. Kyna Fong, 2007. "Evaluating Skilled Experts: Optimal Scoring Rules for Surgeons," Discussion Papers 07-043, Stanford Institute for Economic Policy Research.
  10. Blundell,Richard & Newey,Whitney K. & Persson,Torsten (ed.), 2006. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521692083, October.
  11. Pierre-Yves Yanni, 2012. "Coarse Information and Entrepreneurial Risk Choice," 2012 Meeting Papers 1142, Society for Economic Dynamics.
  12. Jeon, Doh-Shin & Lovo, Stefano, 2011. "Reputation as an Entry Barrier in the Credit Rating Industry," TSE Working Papers 11-235, Toulouse School of Economics (TSE), revised 25 May 2012.
  13. Sabine Sedlacek & Gunther Maier, 2012. "Green Building Councils: Their Economic Role as Governance Institutions," SRE-Disc sre-disc-2012_02, Institute for the Environment and Regional Development, Department of Socioeconomics, Vienna University of Economics and Business.
  14. Bouvard, Matthieu & Levy, Raphael, 2013. "Two-sided reputation in certification markets," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 446, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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