Reputation in Long-Run Relationships

  title={Reputation in Long-Run Relationships},
  author={Alp E. Atakan and Mehmet Ekmekci},
  journal={The Review of Economic Studies},
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. 

Figures from this paper

Reputation in the long-run with imperfect monitoring
Perfect Bayesian Equilibria in Reputation Games with Nested Information Structure
It is exhibited that a control theoretic formulation can be utilized to characterize the equilibrium behavior of reputation games, as well as continuity results in the prior probabilities, and refined upper and lower bounds on the value of reputations.
Reputation in Repeated Moral Hazard Games
We study an infinitely repeated game where two players with equal discount factors play a simultaneous-move stage game. Player one monitors the stage- game actions of player two imperfectly, while
Indeterminacy of reputation effects in repeated games with contracts
Order of limits in reputations
The fact that small departures from complete information might have large effects on the set of equilibrium payoffs draws interest in the adverse selection approach to study reputations in repeated
Bayesian Repeated Games
We consider Bayesian games, with independent private values, in which uniform punishment strategies are available. We establish that the Nash equilibria of the Bayesian infinitely repeated game
Reputation Effects Under Interdependent Values
  • H. Pei
  • Economics
  • 2020
A patient player privately observes a persistent state and interacts with an infinite sequence of myopic uninformed players. The patient player is either a strategic type who maximizes his payoff or


Maintaining a Reputation when Strategies are Imperfectly Observed
This paper studies reputation effects in games with a single long-run player whose choice of stage-game strategy is imperfectly observed by his opponents. We obtain lower and upper bounds on the
Reputation and Perfection in Repeated Common Interest Games
Abstract We consider a wide class of repeated common interest games perturbed with one-sided incomplete information: one player (the informed player) might be a commitment type playing the Pareto
Reputation and Experimentation in Repeated Games with Two Long-Run Players
The authors consider a repeated game between two long-run players, one of whom is relatively patient. Each player has a small amount of uncertainty about the other's strategy. Given a weak assumption
Reputation with Long Run Players and Imperfect Observation
Previous work shows that reputation results may fail in repeated games between two long-run players with equal discount factors. We restrict attention to an infinitely repeated game where two players
Reputation and commitment in two-person repeated games
This work extends Schmidt (1993) who analyzed the restricted class of conflicting interest games to the case of two-sided uncertainty and finds the lower bound is the best available and is robust to the existence of other types.
Reputation and Dynamic Stackelberg Leadership in Infinitely Repeated Games
Abstract The paper studies a repeated game in which a long-run player without discounting ?faces another long-run player with strict discounting. The game is perturbed so that there is uncertainty in
Reputation and Equilibrium Characterization in Repeated Games with Conflicting Interests
A two-person game is of conflicting interests if the strategy to which player one would most like to commit herself holds player two down to his minimax payoff. Suppose there is a positive prior
Building a Reputation under Frequent Decisions
I study reputation games with frequent decisions and persistently imperfect monitoring. In these games, as the period length tends to zero, the monitoring structure approaches a continuous-time
Reputation and Equilibrium Selection in Games with a Patient Player
A single, long-run player plays a simultaneous-move stage game against a sequence of opponents who only play once, but observe all previous play. If there is a positive prior probability that the
Imperfect Monitoring and Impermanent Reputations
We study the long-run sustainability of reputations in games with imperfect public monitoring. It is impossible to maintain a permanent reputation for playing a strategy that does not play an