Reputation for Playing Mixed Actions: A Characterization Theorem

Harry Pei

Papers from arXiv.org

Abstract: A patient player privately observes a persistent state that directly affects his myopic opponents' payoffs, and can be one of the several commitment types that plays the same mixed action in every period. I characterize the set of environments under which the patient player obtains at least his commitment payoff in all equilibria regardless of his stage-game payoff function. Due to interdependent values, the patient player cannot guarantee his mixed commitment payoff by imitating the mixed-strategy commitment type, and small perturbations to a pure commitment action can significantly reduce the patient player's guaranteed equilibrium payoff.

Date: 2020-06, Revised 2021-04
New Economics Papers: this item is included in nep-gth and nep-mic
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