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Reputation in the presence of noisy exogenous learning

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  • Hu, Ju

Abstract

This note extends Wiseman [6] to more general reputation games with exogenous learning. Using Gossner's [4] relative entropy method, we provide an explicit lower bound on all Nash equilibrium payoffs of the long-lived player. The lower bound shows that when the exogenous signals are sufficiently noisy and the long-lived player is patient, he can be assured of a payoff strictly higher than his minmax payoff.

Suggested Citation

  • Hu, Ju, 2014. "Reputation in the presence of noisy exogenous learning," Journal of Economic Theory, Elsevier, vol. 153(C), pages 64-73.
    • Handle: RePEc:eee:jetheo:v:153:y:2014:i:c:p:64-73
    DOI: 10.1016/j.jet.2014.05.008
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    References listed on IDEAS

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    1. Ekmekci, Mehmet & Gossner, Olivier & Wilson, Andrea, 2012. "Impermanent types and permanent reputations," Journal of Economic Theory, Elsevier, vol. 147(1), pages 162-178.
    2. Drew Fudenberg & David K. Levine, 2008. "Maintaining a Reputation when Strategies are Imperfectly Observed," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 8, pages 143-161, World Scientific Publishing Co. Pte. Ltd..
    3. Olivier Gossner, 2011. "Simple bounds on the value of a reputation," PSE-Ecole d'économie de Paris (Postprint) halshs-00654683, HAL.
    4. Olivier Gossner, 2011. "Simple Bounds on the Value of a Reputation," Econometrica, Econometric Society, vol. 79(5), pages 1627-1641, September.
    5. Mailath, George J. & Samuelson, Larry, 2006. "Repeated Games and Reputations: Long-Run Relationships," OUP Catalogue, Oxford University Press, number 9780195300796.
    6. Wiseman, Thomas, 2009. "Reputation and exogenous private learning," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1352-1357, May.
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    Cited by:

    1. Jesper Rudiger & Adrien Vigier, 2015. "Pundits and Quacks," Cowles Foundation Discussion Papers 1997, Cowles Foundation for Research in Economics, Yale University.

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    More about this item

    Keywords

    Reputation; Repeated games; Learning; Relative entropy;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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