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Limits to Reputations

Author

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  • Mehmet Ekmekci

    (Northwestern University)

  • Nuh Dalkiran

    (Bilkent University)

Abstract

Much of the interest in the adverse selection approach to reputations in repeated games arises from the fact that quite small departures from the complete information model seems to have large effects on the set of equilibrium payoffs. We show that this is not the case in reputation games where a long-run player plays a fixed stage-game against an infinite sequence of short-run players under imperfect public-monitoring. We conclude that in such games, introducing arbitrarily small incomplete information cannot open the possibility of new equilibrium payoffs that are far away from the complete information equilibrium payoff set, even when the long-run player's discount factor is very high but fixed. Our main result implies that the standard reputation results hold true due to a specific order of limits.

Suggested Citation

  • Mehmet Ekmekci & Nuh Dalkiran, 2013. "Limits to Reputations," 2013 Meeting Papers 49, Society for Economic Dynamics.
  • Handle: RePEc:red:sed013:49
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    References listed on IDEAS

    as
    1. Drew Fudenberg & David K. Levine, 2008. "Reputation And Equilibrium Selection In Games With A Patient Player," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 7, pages 123-142, World Scientific Publishing Co. Pte. Ltd..
    2. Martin W. Cripps & George J. Mailath & Larry Samuelson, 2004. "Imperfect Monitoring and Impermanent Reputations," Econometrica, Econometric Society, vol. 72(2), pages 407-432, March.
    3. Sekiguchi, Tadashi, 1997. "Efficiency in Repeated Prisoner's Dilemma with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 76(2), pages 345-361, October.
    4. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    5. Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, vol. 27(2), pages 280-312, August.
    6. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1990. "Toward a Theory of Discounted Repeated Games with Imperfect Monitoring," Econometrica, Econometric Society, vol. 58(5), pages 1041-1063, September.
    7. Michihiro Kandori & Hitoshi Matsushima, 1998. "Private Observation, Communication and Collusion," Econometrica, Econometric Society, vol. 66(3), pages 627-652, May.
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