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Indeterminacy of reputation effects in repeated games with contracts

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  • Wolitzky, Alexander

Abstract

We study whether allowing players to sign binding contracts governing future play leads to reputation effects in repeated games with long-run players. We proceed by extending the analysis of Abreu and Pearce (2007) by allowing for the possibility that different behavioral types may not be immediately distinguishable from each other. Given any prior over behavioral types, we construct a modified prior with the same total weight on behavioral types and a larger support under which almost all efficient, feasible, and individually rational payoffs are attainable in perfect Bayesian equilibrium. Thus, whether reputation effects emerge in repeated games with contracts depends on details of the prior distribution over behavioral types other than its support.

Suggested Citation

  • Wolitzky, Alexander, 2011. "Indeterminacy of reputation effects in repeated games with contracts," Games and Economic Behavior, Elsevier, vol. 73(2), pages 595-607.
  • Handle: RePEc:eee:gamebe:v:73:y:2011:i:2:p:595-607
    DOI: 10.1016/j.geb.2011.02.009
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:proeco:v:191:y:2017:i:c:p:178-193 is not listed on IDEAS
    2. Abreu, Dilip & Pearce, David G. & Stacchetti, Ennio, 2015. "One-sided uncertainty and delay in reputational bargaining," Theoretical Economics, Econometric Society, vol. 10(3), September.

    More about this item

    Keywords

    Bargaining; Contracts; Equilibrium selection; Long-run players; Repeated games; Reputation;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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