REPUTATION BY IMITATION: AN EVOLUTIONARY MODEL WITH STRATEGIC MATCHING

Thierry Vignolo ()
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Thierry Vignolo: European University Institute, Economic Department, Villa San Paolo, Via della Piazzuola 43, I-50133 Firenze, Italy

International Game Theory Review (IGTR), 2006, vol. 08, issue 03, 417-428

Abstract: This paper shows howstrategic matchinggenerates reputation-building behavior in an evolutionary chain-store game.Strategic matchingmeans the possibility for an entrant to choose in a strategic way the local market into which it will move. Players are boundedly rational and follow behavioral rules simply requiring that the frequency of any strategy enjoying the highest payoff should never decrease. In preventing the random entries in markets of "fighting monopolists",strategic matchingreinforces the reputation effects. Using the bounded rationality set-up offered by evolutionary game theory, the paper follows Selten (1978)'s intuition underlying the necessity of a limited rationality approach in order to capture reputation effects.

Keywords: Evolutionary game theory; matching processes; reputation; chain-store game; JEL Classification Number: C72; JEL Classification Number: C73; JEL Classification Number: L1 (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1142/S0219198906000990

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