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Bad Reputation

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  • Jeffrey C. Ely
  • Juuso Valimaki

Abstract

We construct a model where the reputational concern of the long-run player to look good in the current period results in the loss of all surplus. This is in contrast to the bulk of the literature on reputations where such considerations mitigate myopic incentive problems. We also show that in models where all parties have long-run objectives, such losses can be avoided.
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Suggested Citation

  • Jeffrey C. Ely & Juuso Valimaki, 2002. "Bad Reputation," Discussion Papers 1348, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    • Handle: RePEc:nwu:cmsems:1348
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    References listed on IDEAS

    as
    1. George J. Mailath & Larry Samuelson, "undated". "Your Reputation Is Who You're Not, Not Who You'd Like To Be," Penn CARESS Working Papers bb1b279d6539c9ed3b83a027c, Penn Economics Department.
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    8. Aumann, Robert J. & Heifetz, Aviad, 2002. "Incomplete information," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 3, chapter 43, pages 1665-1686, Elsevier.
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    13. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
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