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Impermanent types and permanent reputations

Author

Listed:
  • Mehmet Ekmekci

    (Kellogg School of Management - Northwestern University)

  • Olivier Gossner

    (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, LSE - London School of Economics and Political Science)

  • Andrea Wilson

    (Department of economics - New York University [New York])

Abstract

We study the impact of unobservable stochastic replacements for the long-run player in the classical reputation model with a long-run player and a series of short-run players. We provide explicit lower bounds on the Nash equilibrium payoffs of a long-run player, both ex-ante and following any positive probability history. Under general conditions on the convergence rates of the discount factor to one and of the rate of replacement to zero, both bounds converge to the Stackelberg payoff if the type space is sufficiently rich. These limiting conditions hold in particular if the game is played very frequently.

Suggested Citation

  • Mehmet Ekmekci & Olivier Gossner & Andrea Wilson, 2012. "Impermanent types and permanent reputations," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-00754608, HAL.
  • Handle: RePEc:hal:pseose:halshs-00754608
    DOI: 10.1016/j.jet.2011.11.006
    Note: View the original document on HAL open archive server: https://hal-pjse.archives-ouvertes.fr/halshs-00754608
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    References listed on IDEAS

    as
    1. Cole, Harold L & Dow, James & English, William B, 1995. "Default, Settlement, and Signalling: Lending Resumption in a Reputational Model of Sovereign Debt," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 365-385, May.
    2. Gossner, Olivier & Tomala, Tristan, 2008. "Entropy bounds on Bayesian learning," Journal of Mathematical Economics, Elsevier, vol. 44(1), pages 24-32, January.
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    4. Martin W. Cripps & George J. Mailath & Larry Samuelson, 2004. "Imperfect Monitoring and Impermanent Reputations," Econometrica, Econometric Society, vol. 72(2), pages 407-432, March.
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    7. Drew Fudenberg & David K. Levine, 2008. "Maintaining a Reputation when Strategies are Imperfectly Observed," World Scientific Book Chapters,in: A Long-Run Collaboration On Long-Run Games, chapter 8, pages 143-161 World Scientific Publishing Co. Pte. Ltd..
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    16. Drew Fudenberg & David K. Levine, 2008. "Reputation And Equilibrium Selection In Games With A Patient Player," World Scientific Book Chapters,in: A Long-Run Collaboration On Long-Run Games, chapter 7, pages 123-142 World Scientific Publishing Co. Pte. Ltd..
    17. Phelan, Christopher, 2006. "Public trust and government betrayal," Journal of Economic Theory, Elsevier, vol. 130(1), pages 27-43, September.
    18. Bernardita Vial, 2008. "Competitive Equilibrium and Reputation under Imperfect Public Monitoring," Documentos de Trabajo 327, Instituto de Economia. Pontificia Universidad Católica de Chile..
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    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.
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    22. Wiseman, Thomas, 2009. "Reputation and exogenous private learning," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1352-1357, May.
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    Citations

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    Cited by:

    1. Liu, Qingmin & Skrzypacz, Andrzej, 2014. "Limited records and reputation bubbles," Journal of Economic Theory, Elsevier, vol. 151(C), pages 2-29.
    2. Daron Acemoglu & Alexander Wolitzky, 2012. "Cycles of Distrust: An Economic Model," Levine's Working Paper Archive 786969000000000502, David K. Levine.
    3. repec:eee:gamebe:v:109:y:2018:i:c:p:382-400 is not listed on IDEAS
    4. Sharma, Priyanka, 2017. "Is more information always better? A case in credit markets," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 269-283.
    5. Hu, Ju, 2014. "Reputation in the presence of noisy exogenous learning," Journal of Economic Theory, Elsevier, vol. 153(C), pages 64-73.
    6. Harbaugh, Rick & To, Ted, 2014. "Opportunistic discrimination," European Economic Review, Elsevier, vol. 66(C), pages 192-204.
    7. Ju Hu, 2013. "Reputation in the Presence of Noisy Exogenous Learning," PIER Working Paper Archive 13-009, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    8. Renault, Jérôme & Solan, Eilon & Vieille, Nicolas, 2013. "Dynamic sender–receiver games," Journal of Economic Theory, Elsevier, vol. 148(2), pages 502-534.
    9. repec:eee:proeco:v:191:y:2017:i:c:p:178-193 is not listed on IDEAS
    10. Nuh Aygün Dalkıran, 2016. "Order of limits in reputations," Theory and Decision, Springer, vol. 81(3), pages 393-411, September.

    More about this item

    Keywords

    Reputation; Repeated games; Impermanent types;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics

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