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Reputation in Dynamic Games

  • Celentani, Marco
  • Pesendorfer, Wolfgang

We consider an infinite dynamic game played by one large player and a large number of small players. State variables are allowed, and public histories include only the play of the large player, the aggregate play of the small players and the aggregate state variable. We use a reputational argument that restricts the set of equilibria to profiles that give the large player almost what he could get by committing to an optimal strategy as his discount factor approaches 1. Furthermore we identify a class of dynamic games where this result holds even if the small players' discount factor also approaches 1.

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

Volume (Year): 70 (1996)
Issue (Month): 1 (July)
Pages: 109-132

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Handle: RePEc:eee:jetheo:v:70:y:1996:i:1:p:109-132
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  1. David Kreps & Robert Wilson, 1999. "Reputation and Imperfect Information," Levine's Working Paper Archive 238, David K. Levine.
  2. Ausubel, Lawrence M & Deneckere, Raymond J, 1989. "Reputation in Bargaining and Durable Goods Monopoly," Econometrica, Econometric Society, vol. 57(3), pages 511-31, May.
  3. Coase, Ronald H, 1972. "Durability and Monopoly," Journal of Law and Economics, University of Chicago Press, vol. 15(1), pages 143-49, April.
  4. Faruk Gul & Hugo Sonnenschein & Robert Wilson, 2010. "Foundations of Dynamic Monopoly and the Coase Conjecture," Levine's Working Paper Archive 232, David K. Levine.
  5. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
  6. Cripps, M. & Thomas, J.P., 1992. "Reputation and commitment in two-person repeated games," Discussion Paper 1992-10, Tilburg University, Center for Economic Research.
  7. Drew Fudenberg & David Levine, 1987. "Reputation and Equilibrium Selection in Games With a Patient Player," Working papers 461, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Drew Fudenberg & David K. Levine & Jean Tirole, 1985. "Infinite-Horizon Models of Bargaining with One-Sided Incomplete Information," Levine's Working Paper Archive 1098, David K. Levine.
  9. Cripps, Martin W & Thomas, Jonathan P, 1995. "Reputation and Commitment in Two-Person Repeated Games without Discounting," Econometrica, Econometric Society, vol. 63(6), pages 1401-19, November.
  10. Paul Milgrom & John Roberts, 1997. "Predation, reputation , and entry deterrence," Levine's Working Paper Archive 1460, David K. Levine.
  11. Eddie Dekel and Joseph Farrell., 1990. "One-Sided Patience with One-Sided Communication Does Not Justify Stackelberg Equilibrium," Economics Working Papers 90-136, University of California at Berkeley.
  12. Schmidt, Klaus M, 1993. "Reputation and Equilibrium Characterization in Repeated Games with Conflicting Interests," Econometrica, Econometric Society, vol. 61(2), pages 325-51, March.
  13. Fischer, Stanley, 1980. "Dynamic inconsistency, cooperation and the benevolent dissembling government," Journal of Economic Dynamics and Control, Elsevier, vol. 2(1), pages 93-107, May.
  14. Dutta, P.K., 1991. "A Folk Theorem for Stochastic Games," RCER Working Papers 293, University of Rochester - Center for Economic Research (RCER).
  15. Larry M. Ausubel & Raymond J. Deneckere, 1989. "Reputation in Bargaining and Durable Goods Monopoly," Levine's Working Paper Archive 201, David K. Levine.
  16. Nancy L. Stokey, 1981. "Rational Expectations and Durable Goods Pricing," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 112-128, Spring.
  17. V. V. Chari & Patrick J Kehoe, 1998. "Sustainable Plans," Levine's Working Paper Archive 600, David K. Levine.
  18. Kydland, Finn E. & Prescott, Edward C., 1980. "Dynamic optimal taxation, rational expectations and optimal control," Journal of Economic Dynamics and Control, Elsevier, vol. 2(1), pages 79-91, May.
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