Reputation in dynamic games

Marco Celentani, Wolfgang Pesendorfer

Research output: Contribution to journalArticle

14 Scopus citations

Abstract

We analyze reputation in a game between a large player and a continuum of long-lived small players in which state variables affect players' payoffs. The large player's type is private information. We give conditions under which in every Nash equilibrium a very patient large player will get almost the largest payoff consistent with the small players choosing a best response in a large finite truncation of the game. While our results apply to the time inconsistency problem of optimal government policy, we show that for the durable goods monopoly reputation may fail to improve the monopolist's payoff. Journal of Economic Literature Classification Numbers: C72, C73.

Original languageEnglish (US)
Pages (from-to)109-132
Number of pages24
JournalJournal of Economic Theory
Volume70
Issue number1
DOIs
StatePublished - Jul 1996
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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