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When is Reputation Bad

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  • 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.

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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. David Kreps & Robert Wilson, 1999. "Reputation and Imperfect Information," Levine's Working Paper Archive 238, David K. Levine.
  2. Drew Fudenberg & David K. Levine & Eric Maskin, 1994. "The Folk Theorem with Imperfect Public Information," Levine's Working Paper Archive 394, David K. Levine.
  3. Stephen Morris, 2001. "Political Correctness," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 109(2), pages 231-265, April.
  4. Fudenberg, Drew & Kreps, David M & Maskin, Eric S, 1990. "Repeated Games with Long-run and Short-run Players," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 57(4), pages 555-73, October.
  5. George J. Mailath & Larry Samuelson, . ""Who Wants a Good Reputation?''," CARESS Working Papres, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences 98-12, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  6. Jeffrey C. Ely & Juuso Valimaki, 2002. "Bad Reputation," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1348, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Levine, David & Fudenberg, Drew, 1994. "Efficiency and Observability with Long-Run and Short-Run Players," Scholarly Articles 3203774, Harvard University Department of Economics.
  8. Paul Milgrom & John Roberts, 1997. "Predation, reputation , and entry deterrence," Levine's Working Paper Archive 1460, David K. Levine.
  9. George J. Mailath & Larry Samuelson, . "Your Reputation Is Who You're Not, Not Who You'd Like To Be," Penn CARESS Working Papers, Penn Economics Department bb1b279d6539c9ed3b83a027c, Penn Economics Department.
  10. Sorin, Sylvain, 1999. "Merging, Reputation, and Repeated Games with Incomplete Information," Games and Economic Behavior, Elsevier, Elsevier, vol. 29(1-2), pages 274-308, October.
  11. 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.
  12. Fudenberg, Drew & Levine, David K, 1992. "Maintaining a Reputation When Strategies Are Imperfectly Observed," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 59(3), pages 561-79, July.
  13. Marco Celentani, 1993. "Maintaining a Reputation Against A Long-Lived Opponent," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1075R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  14. Fudenberg, Drew & Kreps, David M, 1987. "Reputation in the Simultaneous Play of Multiple Opponents," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 54(4), pages 541-68, October.
  15. 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.
  16. Mailath, George J & Samuelson, Larry, 2001. "Who Wants a Good Reputation? Erratum," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 68(3), pages 714, July.
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