Reputation with equal discounting in repeated games with strictly conflicting interests

Martin W. Cripps, Eddie Dekel*, Wolfgang Pesendorfer

*Corresponding author for this work

Research output: Contribution to journalArticle

26 Scopus citations

Abstract

We analyze reputation effects in two-player repeated games of strictly conflicting interests. In such games, player 1 has a commitment action such that a best reply to it gives player 1 the highest individually rational payoff and player 2 the minmax payoff. Players have equal discount factors. With positive probability player 1 is a type who chooses the commitment action after every history. We show that player 1's payoff converges to the maximally feasible payoff when the discount factor converges to one. This contrasts with failures of reputation effects for equal discount factors that have been demonstrated in the literature.

Original languageEnglish (US)
Pages (from-to)259-272
Number of pages14
JournalJournal of Economic Theory
Volume121
Issue number2
DOIs
StatePublished - Apr 1 2005

Keywords

  • Repeated games
  • Reputation

ASJC Scopus subject areas

  • Economics and Econometrics

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