Honest Equilibria in Reputation Games: The Role of Time Preferences

Publication: Scientific journalJournal articlepeer-review

13 Downloads (Pure)

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.
Original languageEnglish
Pages (from-to)278 - 314
JournalAmerican Economic Journal: Microeconomics
Volume10
Issue number1
DOIs
Publication statusPublished - 2018

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 502027 Political economy
  • 502024 Public economy

Cite this