Indeterminacy of reputation effects in repeated games with contracts

Alexander Wolitzky

Games and Economic Behavior, 2011, vol. 73, issue 2, 595-607

Abstract: We study whether allowing players to sign binding contracts governing future play leads to reputation effects in repeated games with long-run players. We proceed by extending the analysis of Abreu and Pearce (2007) by allowing for the possibility that different behavioral types may not be immediately distinguishable from each other. Given any prior over behavioral types, we construct a modified prior with the same total weight on behavioral types and a larger support under which almost all efficient, feasible, and individually rational payoffs are attainable in perfect Bayesian equilibrium. Thus, whether reputation effects emerge in repeated games with contracts depends on details of the prior distribution over behavioral types other than its support.

Keywords: Bargaining; Contracts; Equilibrium selection; Long-run players; Repeated games; Reputation (search for similar items in EconPapers)
JEL-codes: C70 C73 C78 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:73:y:2011:i:2:p:595-607

DOI: 10.1016/j.geb.2011.02.009

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