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Reputation and exogenous private learning

https://doi.org/10.1016/j.jet.2009.01.005Get rights and content

Abstract

Short-run competitors in the chain store game receive noisy signals of the long-run incumbent firm's type. The history of signals, which in the limit is fully revealing, is observable to the competitors but possibly not to the incumbent. As long as there is sufficient noise in the signals, then in any equilibrium a patient weak incumbent obtains a payoff strictly higher than her minmax payoff.

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Cited by (8)

  • Defending against speculative attacks: The policy maker's reputation

    2017, Journal of Economic Theory
    Citation Excerpt :

    The binary-types model is similar to reputation models in which short-lived uninformed players learn. Specifically, Wiseman (2009) shows that in a chain store game in which short-lived entrants learn, the chain store's reputation bound (the lowest possible equilibrium payoff) converges to the Stackelberg payoff when uninformed players' signals are sufficiently imprecise (but are approaching perfectly informative as time goes by); conversely, when the uninformed players' signals are very precise, the reputation bound is only the informed player's minmax payoff. Proposition 5 has similar but stronger implications.

  • Is more information always better? A case in credit markets

    2017, Journal of Economic Behavior and Organization
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    In contrast, the signals in this paper are informative not of actions but of hidden characteristics. In this respect, the framework of this paper relates closely to that of Wiseman (2009) who, however, characterizes the bounds on equilibrium payoffs when actions can be perfectly observed and signals are informative of a player's hidden characteristics. Some of the recent papers in this area study the impact of restricting the uninformed players’ access to the informed player's history of observable actions by limiting record-keeping capacities (Liu and Skrzypacz, 2014), costly information acquisition (Liu, 2011), or information censoring by only providing a summary statistic for history (Dellarocas, 2011; Doraszelski and Escobar, 2012; Ekmekci, 2011).

  • Reputations in Repeated Games

    2015, Handbook of Game Theory with Economic Applications
  • Reputation in the presence of noisy exogenous learning

    2014, Journal of Economic Theory
    Citation Excerpt :

    Section 3 presents the main result. Section 4 applies the obtained lower bound to the example considered in Wiseman [6] and discusses the result. All the proofs are in Appendix A.

  • Impermanent types and permanent reputations

    2012, Journal of Economic Theory
    Citation Excerpt :

    In infinitely repeated games, [11,12] show that, under very weak assumptions on the monitoring technology, in any Nash equilibrium an arbitrarily patient long-run player obtains a payoff that is at least as much as the payoff he could get by publicly committing to playing any of the commitment type strategies. On the other hand, [6,7,29] show that for a class of stage games, all reputation effects are temporary if the actions of the long-run player are imperfectly monitored.6 In the benchmark model in [11,12], the long-run playerʼs type is fixed once and for all at the beginning of the repeated game.7

  • Sustainable reputations with rating systems

    2011, Journal of Economic Theory
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I thank seminar audiences, two referees, and an associate editor for helpful comments, and the National Science Foundation for financial support under grant SES-0614654.

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