A reputation for honesty

Drew Fudenberg; Ying Gao; Harry Pei

doi:10.1016/j.jet.2022.105508

A reputation for honesty

Drew Fudenberg, Ying Gao, Harry Pei^*

^*Corresponding author for this work

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

We analyze situations where players build reputations for honesty rather than for playing particular actions. A patient player faces a sequence of short-run opponents. Before players act, the patient player announces their intended action after observing both a private payoff shock and a signal of what actions will be feasible that period. The patient player is either an honest type who keeps their word whenever their announced action is feasible, or an opportunistic type who freely chooses announcements and feasible actions. Short-run players only observe the current-period announcement and whether the patient player has kept their word in the past. We provide sufficient conditions under which the patient player can secure their optimal commitment payoff by building a reputation for honesty. Our proof introduces a novel technique based on concentration inequalities.

Original language	English (US)
Article number	105508
Journal	Journal of Economic Theory
Volume	204
DOIs	https://doi.org/10.1016/j.jet.2022.105508
State	Published - Sep 2022

Funding

We thank Mehmet Ekmekci, Faruk Gul, Navin Kartik, Giacomo Lanzani, David Levine, Wojciech Olszewski, Larry Samuelson, an associate editor, and two referees for helpful comments. We thank the National Science Foundation grants SES-1947021 and SES-1951056 for financial support.

Keywords

Concentration inequalities
Honesty
Learning
Reputation

ASJC Scopus subject areas

Economics and Econometrics

Access to Document

10.1016/j.jet.2022.105508

Cite this

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title = "A reputation for honesty",

abstract = "We analyze situations where players build reputations for honesty rather than for playing particular actions. A patient player faces a sequence of short-run opponents. Before players act, the patient player announces their intended action after observing both a private payoff shock and a signal of what actions will be feasible that period. The patient player is either an honest type who keeps their word whenever their announced action is feasible, or an opportunistic type who freely chooses announcements and feasible actions. Short-run players only observe the current-period announcement and whether the patient player has kept their word in the past. We provide sufficient conditions under which the patient player can secure their optimal commitment payoff by building a reputation for honesty. Our proof introduces a novel technique based on concentration inequalities.",

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AU - Gao, Ying

AU - Pei, Harry

N1 - Funding Information: We thank Mehmet Ekmekci, Faruk Gul, Navin Kartik, Giacomo Lanzani, David Levine, Wojciech Olszewski, Larry Samuelson, an associate editor, and two referees for helpful comments. We thank the National Science Foundation grants SES-1947021 and SES-1951056 for financial support. Publisher Copyright: © 2022 Elsevier Inc.

PY - 2022/9

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N2 - We analyze situations where players build reputations for honesty rather than for playing particular actions. A patient player faces a sequence of short-run opponents. Before players act, the patient player announces their intended action after observing both a private payoff shock and a signal of what actions will be feasible that period. The patient player is either an honest type who keeps their word whenever their announced action is feasible, or an opportunistic type who freely chooses announcements and feasible actions. Short-run players only observe the current-period announcement and whether the patient player has kept their word in the past. We provide sufficient conditions under which the patient player can secure their optimal commitment payoff by building a reputation for honesty. Our proof introduces a novel technique based on concentration inequalities.

AB - We analyze situations where players build reputations for honesty rather than for playing particular actions. A patient player faces a sequence of short-run opponents. Before players act, the patient player announces their intended action after observing both a private payoff shock and a signal of what actions will be feasible that period. The patient player is either an honest type who keeps their word whenever their announced action is feasible, or an opportunistic type who freely chooses announcements and feasible actions. Short-run players only observe the current-period announcement and whether the patient player has kept their word in the past. We provide sufficient conditions under which the patient player can secure their optimal commitment payoff by building a reputation for honesty. Our proof introduces a novel technique based on concentration inequalities.

KW - Concentration inequalities

KW - Honesty

KW - Learning

KW - Reputation

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A reputation for honesty

Abstract

Funding

Keywords

ASJC Scopus subject areas

Access to Document

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