Impermanent types and permanent reputations |
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Authors: | Mehmet Ekmekci Olivier Gossner Andrea Wilson |
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Institution: | 1. MEDS, Kellogg School of Management, Northwestern University, United States;2. Paris School of Economics, France;3. London School of Economics, United Kingdom;4. Department of Economics, New York University, United States |
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Abstract: | We study the impact of unobservable stochastic replacements for the long-run player in the classical reputation model with a long-run player and a series of short-run players. We provide explicit lower bounds on the Nash equilibrium payoffs of a long-run player, both ex-ante and following any positive probability history. Under general conditions on the convergence rates of the discount factor to one and of the rate of replacement to zero, both bounds converge to the Stackelberg payoff if the type space is sufficiently rich. These limiting conditions hold in particular if the game is played very frequently. |
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