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Bounded memory and permanent reputations

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  • Monte, Daniel

Abstract

A recent result in repeated incomplete information games is that after an arbitrarily long history, any equilibrium of the continuation game must be an equilibrium of the complete information game. This result implies that reputation is a short-run phenomenon. We study a particular class of reputation games and show that bounded memory may lead to permanent reputations. In fact, for a particular range of parameters, a bounded memory player may never be able to learn anything at all.

Suggested Citation

  • Monte, Daniel, 2013. "Bounded memory and permanent reputations," Journal of Mathematical Economics, Elsevier, vol. 49(5), pages 345-354.
    • Handle: RePEc:eee:mateco:v:49:y:2013:i:5:p:345-354
    DOI: 10.1016/j.jmateco.2013.06.006
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    Cited by:

    1. Daron Acemoglu & Alexander Wolitzky, 2012. "Cycles of Distrust: An Economic Model," Levine's Working Paper Archive 786969000000000502, David K. Levine.
    2. Sperisen, Benjamin, 2018. "Bounded memory and incomplete information," Games and Economic Behavior, Elsevier, vol. 109(C), pages 382-400.
    3. Schumacher, Heiner, 2014. "Incentives through consumer learning about tastes," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 170-177.
    4. Heski Bar-Isaac & Joyee Deb, 2012. "Reputation for a Servant of Two Masters," Working Papers 12-08, New York University, Leonard N. Stern School of Business, Department of Economics.
    5. Monte, Daniel, 2014. "Learning with bounded memory in games," Games and Economic Behavior, Elsevier, vol. 87(C), pages 204-223.
    6. Benjamin Sperisen, 2016. "Bounded Memory, Reputation, and Impatience," Working Papers 1602, Tulane University, Department of Economics.
    7. Heski Bar-Isaac Jr. & Joyee Deb Jr., 2014. "(Good and Bad) Reputation for a Servant of Two Masters," American Economic Journal: Microeconomics, American Economic Association, vol. 6(4), pages 293-325, November.

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