IDEAS home Printed from https://ideas.repec.org/h/wsi/wschap/9789812818478_0010.html
   My bibliography  Save this book chapter

When is reputation bad?

In: A Long-Run Collaboration On Long-Run Games

Author

Listed:
  • Jeffrey Ely

    (Department of Economics, Northwestern University, IL 60208, USA)

  • Drew Fudenberg

    (Department of Economics, Harvard University, Cambridge, MA 02138, USA)

  • David K. Levine

    (Department of Economics, UCLA, CA, USA)

Abstract

In traditional reputation models, the ability to build a reputation is good for the long-run player. In [Ely, J., Valimaki, J., 2003. Bad reputation. NAJ Econ. 4, 2; http://www.najecon.org/v4.htm. Quart. J. Econ. 118 (2003) 785–814], Ely and Valimaki give an example in which reputation is unambiguously bad. This paper characterizes a class of games in which that insight holds. The key to bad reputation is that participation is optional for the short-run players, and that every action of the long-run player that makes the short-run players want to participate has a chance of being interpreted as a signal that the long-run player is “bad.” We allow a broad set of commitment types, allowing many types, including the “Stackelberg type” used to prove positive results on reputation. Although reputation need not be bad if the probability of the Stackelberg type is too high, the relative probability of the Stackelberg type can be high when all commitment types are unlikely.

Suggested Citation

  • Jeffrey Ely & Drew Fudenberg & David K. Levine, 2008. "When is reputation bad?," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 10, pages 177-205, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789812818478_0010
    as

    Download full text from publisher

    File URL: https://www.worldscientific.com/doi/pdf/10.1142/9789812818478_0010
    Download Restriction: Ebook Access is available upon purchase.

    File URL: https://www.worldscientific.com/doi/abs/10.1142/9789812818478_0010
    Download Restriction: Ebook Access is available upon purchase.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. George J. Mailath & Larry Samuelson, "undated". ""Your Reputation Is Who You're Not, Not Who You'd Like To Be''," CARESS Working Papres 98-11, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
    2. Drew Fudenberg & David K. Levine, 2008. "Reputation And Equilibrium Selection In Games With A Patient Player," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 7, pages 123-142, World Scientific Publishing Co. Pte. Ltd..
    3. Drew Fudenberg & David Levine & Eric Maskin, 2008. "The Folk Theorem With Imperfect Public Information," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 12, pages 231-273, World Scientific Publishing Co. Pte. Ltd..
    4. George J. Mailath & Larry Samuelson, 2001. "Who Wants a Good Reputation?," Review of Economic Studies, Oxford University Press, vol. 68(2), pages 415-441.
    5. 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..
    6. Marco Celentani & Drew Fudenberg & David K. Levine & Wolfgang Pesendorfer, 2008. "Maintaining A Reputation Against A Long-Lived Opponent," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 9, pages 163-176, World Scientific Publishing Co. Pte. Ltd..
    7. Jeffrey C. Ely & Juuso Välimäki, 2003. "Bad Reputation," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 785-814.
    8. Drew Fudenberg & David K. Levine, 2008. "Efficiency and Observability with Long-Run and Short-Run Players," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 13, pages 275-307, World Scientific Publishing Co. Pte. Ltd..
    9. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    10. Drew Fudenberg & David M. Kreps & Eric S. Maskin, 1990. "Repeated Games with Long-run and Short-run Players," Review of Economic Studies, Oxford University Press, vol. 57(4), pages 555-573.
    11. Drew Fudenberg & David M. Kreps, 1987. "Reputation in the Simultaneous Play of Multiple Opponents," Review of Economic Studies, Oxford University Press, vol. 54(4), pages 541-568.
    12. Stephen Morris, 2001. "Political Correctness," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 231-265, April.
    13. Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, vol. 27(2), pages 280-312, August.
    14. Marco Celentani & Drew Fudenberg & David K. Levine & Wolfgang Pesendorfer, 1996. "Maintaining a Reputation against a Patient Opponent," Levine's Working Paper Archive 2015, David K. Levine.
    15. Sorin, Sylvain, 1999. "Merging, Reputation, and Repeated Games with Incomplete Information," Games and Economic Behavior, Elsevier, vol. 29(1-2), pages 274-308, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mailath, George J. & Samuelson, Larry, 2015. "Reputations in Repeated Games," Handbook of Game Theory with Economic Applications,, Elsevier.
    2. Ekmekci, Mehmet, 2011. "Sustainable reputations with rating systems," Journal of Economic Theory, Elsevier, vol. 146(2), pages 479-503, March.
    3. Egorov, Georgy & Sonin, Konstantin, 2005. "The Killing Game: Reputation and Knowledge in Non-Democratic Succession," CEPR Discussion Papers 5092, C.E.P.R. Discussion Papers.
    4. Jeffrey C. Ely & Juuso Välimäki, 2003. "Bad Reputation," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 785-814.
    5. Ekmekci, Mehmet & Gossner, Olivier & Wilson, Andrea, 2012. "Impermanent types and permanent reputations," Journal of Economic Theory, Elsevier, vol. 147(1), pages 162-178.
    6. Harasser, Andreas, 2014. "Information asymmetry and reentry," Economics Letters, Elsevier, vol. 123(2), pages 118-121.
    7. Alp E. Atakan & Mehmet Ekmekci, 2012. "Reputation in Long-Run Relationships," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 451-480.
    8. Nuh Aygün Dalkıran, 2016. "Order of limits in reputations," Theory and Decision, Springer, vol. 81(3), pages 393-411, September.
    9. Larry Samuelson, 2003. "Imperfect Monitoring and Impermanent Reputations," Theory workshop papers 505798000000000030, UCLA Department of Economics.
    10. Jullien, Bruno & Park, In-Uck, 2019. "Communication, Feedbacks and Repeated Moral Hazard with Short-lived Buyers," TSE Working Papers 19-1027, Toulouse School of Economics (TSE), revised Apr 2020.
    11. Bruno Jullien & In-Uck Park, 2009. "Seller Reputation and Trust in Pre-Trade Communication," Levine's Working Paper Archive 814577000000000330, David K. Levine.
    12. Hausken, Kjell, 2007. "Reputation, incomplete information, and differences in patience in repeated games with multiple equilibria," Economics Letters, Elsevier, vol. 97(2), pages 138-144, November.
    13. Guillermo Ordonez, 2005. "Don't Ask Why Things Went Wrong: Nested Reputation and Scapegoating Inefficiency," Levine's Working Paper Archive 618897000000000988, David K. Levine.
    14. Melkonian, Tigran A., 1998. "Two essays on reputation effects in economic models," ISU General Staff Papers 1998010108000012873, Iowa State University, Department of Economics.
    15. Guillermo Ordonez, 2008. "Essays on Learning and Macroeconomics," Levine's Working Paper Archive 122247000000002250, David K. Levine.
    16. Aislinn Bohren, 2016. "Using Persistence to Generate Incentives in a Dynamic Moral Hazard Problem," PIER Working Paper Archive 16-024, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 15 Oct 2016.
    17. George J. Mailath & Larry Samuelson, "undated". ""Your Reputation Is Who You're Not, Not Who You'd Like To Be''," CARESS Working Papres 98-11, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
    18. Martin W. Cripps & George J. Mailath & Larry Samuelson, 2004. "Imperfect Monitoring and Impermanent Reputations," Econometrica, Econometric Society, vol. 72(2), pages 407-432, March.
    19. Cripps, Martin W. & Mailath, George J. & Samuelson, Larry, 2007. "Disappearing private reputations in long-run relationships," Journal of Economic Theory, Elsevier, vol. 134(1), pages 287-316, May.
    20. Sorin, Sylvain, 1999. "Merging, Reputation, and Repeated Games with Incomplete Information," Games and Economic Behavior, Elsevier, vol. 29(1-2), pages 274-308, October.

    More about this item

    Keywords

    Long-Run Players; Limit Games; Robustness; Equilibrium; Reputation Effects; Repeated Games;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:wschap:9789812818478_0010. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.worldscientific.com/page/worldscibooks .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscientific.com/page/worldscibooks .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.