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Reputation building under uncertain monitoring

Author

Listed:
  • Deb, Joyee

    (Department of Economics, New York University)

  • Ishii, Yuhta

    (Department of Economics, Pennsylvania State University)

Abstract

We study the standard reputation model with a long-run (LR) player facing a sequence of short-run (SR) opponents, with one difference: the SR players are uncertain about the monitoring structure, while the LR player knows it. We construct examples where the standard reputation result breaks down: Even if there is a possibility that the LR player is a commitment type that always plays the action to which he wants to commit, there exist ``bad'' equilibria in which the LR player gets payoffs substantially lower than his commitment payoffs. In contrast, if there is the possibility of dynamic commitment types that switch between ``signaling'' actions that help the SR players learn the monitoring structure and ``collection'' actions that are desirable for payoffs, our main theorem shows that a sufficiently patient LR player obtains payoffs at least the commitment payoffs in each state in every equilibrium.

Suggested Citation

  • Deb, Joyee & Ishii, Yuhta, 0. "Reputation building under uncertain monitoring," Theoretical Economics, Econometric Society.
  • Handle: RePEc:the:publsh:4758
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    References listed on IDEAS

    as
    1. Robert J. Aumann, 1995. "Repeated Games with Incomplete Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011476, April.
    2. Thomas Wiseman, 2005. "A Partial Folk Theorem for Games with Unknown Payoff Distributions," Econometrica, Econometric Society, vol. 73(2), pages 629-645, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Reputation; Monitoring; Learning;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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