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Reputation and Equilibrium Selection in Games with a Patient Player

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  • Fudenberg, Drew
  • Levine, David K

Abstract

A single, long-run player plays a simultaneous-move stage game against a sequence of opponents who only play once, but observe all previous play. If there is a positive prior probability that the long-run player will always play the pure strategy he would most like to commit himself to (his Stackleberg strategy), then his payoff in any Nash equilibrium exceeds a bound that converges to the Stackleberg payoff as his discount factor approaches one. When the stage game is not simultaneous move, this result must be modified to account for the possibility that distinct strategies of the long-run player are observationally equivalent. Copyright 1989 by The Econometric Society.

Suggested Citation

  • Fudenberg, Drew & Levine, David K, 1989. "Reputation and Equilibrium Selection in Games with a Patient Player," Econometrica, Econometric Society, vol. 57(4), pages 759-778, July.
  • Handle: RePEc:ecm:emetrp:v:57:y:1989:i:4:p:759-78
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    References listed on IDEAS

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    1. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
    2. Drew Fudenberg & David Levine, 2008. "Subgame–Perfect Equilibria of Finite– and Infinite–Horizon Games," World Scientific Book Chapters,in: A Long-Run Collaboration On Long-Run Games, chapter 1, pages 3-20 World Scientific Publishing Co. Pte. Ltd..
    3. Reinhard Selten, 1974. "The Chain Store Paradox," Center for Mathematical Economics Working Papers 018, Center for Mathematical Economics, Bielefeld University.
    4. D. Fudenberg & D. M. Kreps, 1969. "Reputation and Simultaneous Opponents," Levine's Working Paper Archive 604, David K. Levine.
    5. Drew Fudenberg & David M. Kreps & David K. Levine, 2008. "On the Robustness of Equilibrium Refinements," World Scientific Book Chapters,in: A Long-Run Collaboration On Long-Run Games, chapter 5, pages 67-93 World Scientific Publishing Co. Pte. Ltd..
    6. Harsanyi, John C, 1995. "Games with Incomplete Information," American Economic Review, American Economic Association, vol. 85(3), pages 291-303, June.
    7. Drew Fudenberg & David M. Kreps & Eric S. Maskin, 1990. "Repeated Games with Long-run and Short-run Players," Review of Economic Studies, Oxford University Press, vol. 57(4), pages 555-573.
    8. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    9. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-554, May.
    10. Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, vol. 27(2), pages 280-312, August.
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    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

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