Robustness of Reputation Effects under Uncertain Monitoring

51 Pages Posted: 1 Dec 2018

See all articles by Geyu Yang

Geyu Yang

Washington University in St. Louis - Department of Economics

Date Written: November 3, 2018

Abstract

I study reputation effects under uncertain monitoring. I examine a repeated game between a long-run player and a series of short-run opponents. The long-run player can either be a strategic type or a commitment type that plays the same action in every period. The modeling innovation is that the short-run player is unsure about the monitoring structure. The uncertainty about the monitoring structure introduces new challenges to reputation building because there may not be a direct relationship between the distribution of signals and the long-run player's strategy. Thus the long-run player may not have the ability to establish a reputation for commitment. I show that, when the short-run players cannot statistically distinguish commitment action from a bad action, the standard reputation results break down. I also provide sufficient conditions under which reputation effects on long-run player’s payoffs can be extended to the current framework. When the commitment payoff is the highest payoff he can get, the conditions can be relaxed.

Keywords: Keywords: reputation, uncertain monitoring, commitment type, payoff bound

JEL Classification: C73, D82, D83

Suggested Citation

Yang, Geyu, Robustness of Reputation Effects under Uncertain Monitoring (November 3, 2018). Available at SSRN: https://ssrn.com/abstract=3266235 or http://dx.doi.org/10.2139/ssrn.3266235

Geyu Yang (Contact Author)

Washington University in St. Louis - Department of Economics ( email )

WA
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
21
Abstract Views
249
PlumX Metrics