Reputation in Long-Run Relationships
We model a long-run relationship as an infinitely repeated game played by two equally patient agents. In each period, the agents play an extensive-form game of perfect information. There is incomplete information about the type of player 1 while player 2’s type is commonly known. We show that a sufficiently patient player 1 can leverage player 2’s uncertainty about his type to secure his highest payoff in any perfect Bayesian equilibrium of the repeated game.
|Date of creation:||01 Dec 2009|
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|Contact details of provider:|| Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014|
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- Michihiro Kandori & Ichiro Obara, 2003.
"Less is More: An Observability Paradox in Repeated Gamess,"
CIRJE-F-246, CIRJE, Faculty of Economics, University of Tokyo.
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- Martin Cripps & George J Mailath & Larry Samuelson, 2010.
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Levine's Working Paper Archive
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- Martin W. Cripps & George J. Mailath & Larry Samuelson, 2002. "Imperfect Monitoring and Impermanent Reputations," PIER Working Paper Archive 03-016, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 30 May 2003.
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- Christopher Phelan, 2001. "Public trust and government betrayal," Staff Report 283, Federal Reserve Bank of Minneapolis.
- Michihiro Kandori, 1992. "The Use of Information in Repeated Games with Imperfect Monitoring," Review of Economic Studies, Oxford University Press, vol. 59(3), pages 581-593.
- Heski Bar-Isaac, 2003. "Reputation and Survival: Learning in a Dynamic Signalling Model," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 231-251.
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