Honest Equilibria in Reputation Games: The Role of Time Preferences
American Economic Journal: Microeconomics
vol. 10,
no. 1, February 2018
(pp. 278-314)
Abstract
New relationships are often plagued with uncertainty because one of the players has some private information about her "type." The reputation literature has shown that equilibria that reveal this private information typically involve breach of trust and conflict. But are these inevitable for equilibrium learning? I analyze self-enforcing relationships where one party is privately informed about her time preferences. I show that there always exist honest reputation equilibria, which fully reveal information and support cooperation without breach or conflict. I compare these to dishonest reputation equilibria from several perspectives. My results are applicable to a broad class of repeated games.Citation
Kartal, Melis. 2018. "Honest Equilibria in Reputation Games: The Role of Time Preferences." American Economic Journal: Microeconomics, 10 (1): 278-314. DOI: 10.1257/mic.20160178Additional Materials
JEL Classification
- C73 Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D86 Economics of Contract: Theory
- Z13 Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
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