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Impermanent types and permanent reputations

  • Ekmekci, Mehmet
  • Gossner, Olivier
  • Wilson, Andrea

We study the impact of unobservable stochastic replacements for the long-run player in the classical reputation model with a long-run player and a series of short-run players. We provide explicit lower bounds on the Nash equilibrium payoffs of a long-run player, both ex-ante and following any positive probability history. Under general conditions on the convergence rates of the discount factor to one and of the rate of replacement to zero, both bounds converge to the Stackelberg payoff if the type space is sufficiently rich. These limiting conditions hold in particular if the game is played very frequently.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 147 (2012)
Issue (Month): 1 ()
Pages: 162-178

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Handle: RePEc:eee:jetheo:v:147:y:2012:i:1:p:162-178
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  1. Phelan, Christopher, 2006. "Public trust and government betrayal," Journal of Economic Theory, Elsevier, vol. 130(1), pages 27-43, September.
  2. Kalai, Ehud & Lehrer, Ehud, 1993. "Rational Learning Leads to Nash Equilibrium," Econometrica, Econometric Society, vol. 61(5), pages 1019-45, September.
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  7. Ekmekci, Mehmet, 2011. "Sustainable reputations with rating systems," Journal of Economic Theory, Elsevier, vol. 146(2), pages 479-503, March.
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  18. Harold L. Cole & James Dow & William B. English, 1994. "Default, settlement, and signalling: lending resumption in a reputational model of sovereign debt," Staff Report 180, Federal Reserve Bank of Minneapolis.
  19. Gossner, Olivier & Tomala, Tristan, 2008. "Entropy Bounds on Bayesian Learning," Economics Papers from University Paris Dauphine 123456789/6067, Paris Dauphine University.
  20. Bernardita Vial, 2008. "Competitive Equilibrium and Reputation under Imperfect Public Monitoring," Documentos de Trabajo 327, Instituto de Economia. Pontificia Universidad Católica de Chile..
  21. Gossner, Olivier & Tomala, Tristan, 2008. "Entropy bounds on Bayesian learning," Journal of Mathematical Economics, Elsevier, vol. 44(1), pages 24-32, January.
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