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When is Reputation Bad?

  • Levine, David
  • Ely, Jeffrey
  • Fudenberg, Drew

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.

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File URL: http://dash.harvard.edu/bitstream/handle/1/3196337/reputation_bad.pdf
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Paper provided by Harvard University Department of Economics in its series Scholarly Articles with number 3196337.

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Date of creation: 2008
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Publication status: Published in Games and Economic Behavior
Handle: RePEc:hrv:faseco:3196337
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Web page: http://www.economics.harvard.edu/

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  1. David Kreps & Robert Wilson, 1999. "Reputation and Imperfect Information," Levine's Working Paper Archive 238, David K. Levine.
  2. Fudenberg, D. & Levine, D.K. & Maskin, E., 1989. "The Folk Theorem With Inperfect Public Information," Working papers 523, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Drew Fudenberg & David Kreps & Eric Maskin, 1988. "Repeated Games with Long-Run and Short-Run Players," Working papers 474, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. 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.
  5. Levine, David & Fudenberg, Drew, 1994. "Efficiency and Observability with Long-Run and Short-Run Players," Scholarly Articles 3203774, Harvard University Department of Economics.
  6. Mailath, George J & Samuelson, Larry, 2001. "Who Wants a Good Reputation? Erratum," Review of Economic Studies, Wiley Blackwell, vol. 68(3), pages 714, July.
  7. George J. Mailath & Larry Samuelson, . ""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.
  8. Paul Milgrom & John Roberts, 1997. "Predation, reputation , and entry deterrence," Levine's Working Paper Archive 1460, David K. Levine.
  9. Drew Fudenberg & David K. Levine, 1995. "Reputation and Equilibrium Selection in Games with a Patient Player," Levine's Working Paper Archive 103, David K. Levine.
  10. Mailath,G.J. & Samuelson,L., 1998. "Who wants a good reputation?," Working papers 19, Wisconsin Madison - Social Systems.
  11. Celentani, Marco, et al, 1996. "Maintaining a Reputation against a Long-Lived Opponent," Econometrica, Econometric Society, vol. 64(3), pages 691-704, May.
  12. Fudenberg, Drew & Kreps, David M, 1987. "Reputation in the Simultaneous Play of Multiple Opponents," Review of Economic Studies, Wiley Blackwell, vol. 54(4), pages 541-68, October.
  13. Jeffrey C. Ely & Juuso Välimäki, 2003. "Bad Reputation," The Quarterly Journal of Economics, MIT Press, vol. 118(3), pages 785-814, August.
  14. Stephen Morris, 2001. "Political Correctness," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 231-265, April.
  15. Fudenberg, Drew & Levine, David K, 1992. "Maintaining a Reputation When Strategies Are Imperfectly Observed," Review of Economic Studies, Wiley Blackwell, vol. 59(3), pages 561-79, July.
  16. 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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