IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Variable Temptations and Black Market Reputations

  • Aperjis, Christina

    (HP Labs)

  • Miao, Yali

    (Jane Street Capital, Tokyo)

  • Zeckhauser, Richard J.

    (Harvard University)

In a world of imperfect information, reputations often guide the sequential decisions to trust and to reward trust. We consider two-player situations, where one player--the truster--decides whether to trust, and the other player--the temptee--has a temptation to betray when trusted. The strength of the temptation to betray varies from encounter to encounter. We refer to a recorded betrayal as a black mark and focus on mechanisms that only reveal the number of black marks of a temptee. We show that the greater the number of black marks, the less likely the temptee is to betray. We then study the different equilibria that emerge, depending on which side of the market has the ability to specify the equilibrium. In closing, we generalize to cases where the number of encounters is also recorded.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://web.hks.harvard.edu/publications/getFile.aspx?Id=682
Our checks indicate that this address may not be valid because: 404 Not Found. If this is indeed the case, please notify ()


Download Restriction: no

Paper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number 11-020.

as
in new window

Length:
Date of creation: Mar 2011
Date of revision:
Handle: RePEc:ecl:harjfk:11-020
Contact details of provider: Postal: 79 JFK Street, Cambridge, MA 02138
Fax: 617-496-2554
Web page: http://www.ksg.harvard.edu/research/working_papers/index.htm

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Joseph Farrell, 1987. "Cheap Talk, Coordination, and Entry," RAND Journal of Economics, The RAND Corporation, vol. 18(1), pages 34-39, Spring.
  2. Mailath, George J. & Olszewski, Wojciech, 2011. "Folk theorems with bounded recall under (almost) perfect monitoring," Games and Economic Behavior, Elsevier, vol. 71(1), pages 174-192, January.
  3. Heski Bar-Isaac, 2003. "Reputation and Survival: Learning in a Dynamic Signalling Model," Review of Economic Studies, Wiley Blackwell, vol. 70(2), pages 231-251, 04.
  4. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
  5. Roger B. Myerson, 2009. "Learning from Schelling's Strategy of Conflict," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 1109-25, December.
  6. Doraszelski, Ulrich & Escobar, Juan F., 2012. "Restricted feedback in long term relationships," Journal of Economic Theory, Elsevier, vol. 147(1), pages 142-161.
  7. Susan Athey & Kyle Bagwell & Chris Sanchirico, 2004. "Collusion and Price Rigidity," Review of Economic Studies, Oxford University Press, vol. 71(2), pages 317-349.
  8. Levine, David & Ely, Jeffrey & Fudenberg, Drew, 2008. "When is Reputation Bad?," Scholarly Articles 3196337, Harvard University Department of Economics.
  9. Nolan Miller & Paul Resnick & Richard Zeckhauser, 2005. "Eliciting Informative Feedback: The Peer-Prediction Method," Management Science, INFORMS, vol. 51(9), pages 1359-1373, September.
  10. Mailath, George J. & Samuelson, Larry, 2006. "Repeated Games and Reputations: Long-Run Relationships," OUP Catalogue, Oxford University Press, number 9780195300796.
  11. Susan Athey & Kyle Bagwell, 1999. "Optimal Collusion with Private Information," Working papers 99-17, Massachusetts Institute of Technology (MIT), Department of Economics.
  12. Sobel, Joel, 1985. "A Theory of Credibility," Review of Economic Studies, Wiley Blackwell, vol. 52(4), pages 557-73, October.
  13. Harold L. Cole & Narayana R. Kocherlakota, 2001. "Finite memory and imperfect monitoring," Staff Report 287, Federal Reserve Bank of Minneapolis.
  14. Martin W. Cripps & George J. Mailath & Larry Samuelson, 2004. "Imperfect Monitoring and Impermanent Reputations," Econometrica, Econometric Society, vol. 72(2), pages 407-432, 03.
  15. Ekmekci, Mehmet, 2011. "Sustainable reputations with rating systems," Journal of Economic Theory, Elsevier, vol. 146(2), pages 479-503, March.
  16. Gary E. Bolton & Ben Greiner & Axel Ockenfels, 2009. "Engineering Trust - Reciprocity in the Production of Reputation Information," Discussion Papers 2009-02, School of Economics, The University of New South Wales.
  17. Chrysanthos Dellarocas & Charles A. Wood, 2008. "The Sound of Silence in Online Feedback: Estimating Trading Risks in the Presence of Reporting Bias," Management Science, INFORMS, vol. 54(3), pages 460-476, March.
  18. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-51, November.
  19. Dale, Donald J. & Morgan, John & Rosenthal, Robert W., 2002. "Coordination through Reputations: A Laboratory Experiment," Games and Economic Behavior, Elsevier, vol. 38(1), pages 52-88, January.
  20. Bendor, Jonathan & Mookherjee, Dilip, 1990. "Norms, Third-Party Sanctions, and Cooperation," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(1), pages 33-63, Spring.
  21. Eric Helland & Alexander Tabarrok, 2007. "Does Three Strikes Deter?: A Nonparametric Estimation," Journal of Human Resources, University of Wisconsin Press, vol. 42(2).
  22. Qingmin Liu, 2011. "Information Acquisition and Reputation Dynamics," Review of Economic Studies, Oxford University Press, vol. 78(4), pages 1400-1425.
  23. Lambson, Val Eugene, 1987. "Optimal Penal Codes in Price-Setting Supergames with Capacity Constraints," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 385-97, July.
  24. Kandori, Michihiro, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Wiley Blackwell, vol. 59(1), pages 63-80, January.
  25. Hopenhayn, Hugo A. & Skrzypacz, Andrzej, 2001. "Tacit Collusion in Repeated Auctions," Research Papers 1698r2, Stanford University, Graduate School of Business.
  26. Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
  27. Okuno-Fujiwara Masahiro & Postlewaite Andrew, 1995. "Social Norms and Random Matching Games," Games and Economic Behavior, Elsevier, vol. 9(1), pages 79-109, April.
  28. Barlo, Mehmet & Carmona, Guilherme & Sabourian, Hamid, 2009. "Repeated games with one-memory," Journal of Economic Theory, Elsevier, vol. 144(1), pages 312-336, January.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ecl:harjfk:11-020. 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: ()

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.