Abstract
A patient player privately observes a persistent state that directly affects his opponents' payoffs, and can be one of the several commitment types that plays the same mixed action in every period. I characterize the set of environments under which the patient player obtains at least his commitment payoff in all equilibria regardless of his stage-game payoff function. Due to the presence of interdependent values, the patient player cannot guarantee his mixed commitment payoff by imitating the mixed commitment type, and small perturbations to a pure commitment action can significantly reduce the patient player's lowest equilibrium payoff.
| Original language | English (US) |
|---|---|
| Article number | 105438 |
| Journal | Journal of Economic Theory |
| Volume | 201 |
| DOIs | |
| State | Published - Apr 2022 |
Funding
I am indebted to Daron Acemoglu, Drew Fudenberg, Juuso Toikka, and Alex Wolitzky for guidance and support. I thank Heski Bar-Isaac, Daniel Clark, Martin Cripps, Joyee Deb, Mehmet Ekmekci, Jack Fanning, Yuhta Ishii, Elliot Lipnowski, Qingmin Liu, Shuo Liu, Lucas Maestri, Marcin Pȩski, Bruno Strulovici, Can Urgun, Nicolas Vieille, Geyu Yang, an associate editor, and two referees for helpful comments. I thank Jin Yang, Maren Vairo, and Tomer Yehoshua-Sandak for excellent research assistance and the NSF Grant SES-1947021 for financial support.
Keywords
- Doob's Upcrossing Inequality
- Interdependent values
- Reputation
- Supermartingales
ASJC Scopus subject areas
- Economics and Econometrics