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Reputation Effects In Dynamic Games

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Abstract

The solution of a reputational equilibrium is given for a class of linear, quadratic, gaussian dynamic games with noisy control. Although there is imperfect monitoring, a sequential equilibrium is found where the uninformed agents always smoothly learn the type of the informed agent, there is no sudden switch in agents' strategies ; a common feature of reputational models. Reputation effects are temporary in the infinite horizon case for positive discount rates, as the discount factor tends to unity there is a permanent reputation.

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  • Cripps, M., 1989. "Reputation Effects In Dynamic Games," The Warwick Economics Research Paper Series (TWERPS) 329, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:329
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    1. Milgrom, Paul & Roberts, John, 1982. "Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis," Econometrica, Econometric Society, vol. 50(2), pages 443-459, March.
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