Reputation in Repeated Moral Hazard Games

Alp Atakan and Mehmet Ekmekci ()

MPRA Paper from University Library of Munich, Germany

Abstract: We study an infinitely repeated game where two players with equal discount factors play a simultaneous-move stage game. Player one monitors the stage- game actions of player two imperfectly, while player two monitors the pure stage- game actions of player one perfectly. Player one’s type is private information and he may be a “commitment type,” drawn from a countable set of commitment types, who is locked into playing a particular strategy. Under a full-support assumption on the monitoring structure, we prove a reputation result for repeated moral hazard games: if there is positive probability that player one is a particular type whose commitment payoff is equal to player one’s highest payoff, consistent with the players’ individual rationality, then a patient player one secures this type’s commitment payoff in any Bayes-Nash equilibrium of the repeated game.

Keywords: Repeated Games; Reputation; Equal Discount Factor; Long-run Players; Imperfect Monitoring; Complicated Types; Finite Automaton (search for similar items in EconPapers)
JEL-codes: C7 C72 C73 D0 (search for similar items in EconPapers)
Date: 2014-01-01
New Economics Papers: this item is included in nep-cta, nep-gth, nep-hpe and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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