Reputation Effects with Endogenous Records
A patient player interacts with a sequence of short-run players. The patient player is either an honest type who always takes a commitment action and never erases any record, or an opportunistic type who decides which action to take and whether to erase that action from his record at a low cost. We show that the patient player will have an incentive to build a reputation in every equilibrium and can secure a payoff that is strictly greater than his commitment payoff after accumulating a long enough good record. However, as long as the patient player has a sufficiently long lifespan, his equilibrium payoff must be close to his minmax value. Although a small probability of opportunistic type can wipe out all of the patient player’s returns from building reputations, it only has a negligible effect on the short-run players’ welfare.
Date: 8 March 2024, 14:15 (Friday, 8th week, Hilary 2024)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room G or
Speaker: Harry Pei (Northwestern University)
Organising department: Department of Economics
Part of: Nuffield Economic Theory Seminar
Booking required?: Not required
Audience: Members of the University only
Editors: Shreyasi Banerjee, Edward Clark