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| Main Author: | |
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| Format: | Preprint |
| Published: |
2024
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| Subjects: | |
| Online Access: | https://arxiv.org/abs/2404.18884 |
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| _version_ | 1866912885109686272 |
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| author | Luo, Daniel |
| author_facet | Luo, Daniel |
| contents | I study reputation formation in repeated games where player actions endogenously determine the probability the game permanently ends. Permanent exit can render reputation useless even to a patient long-lived player whose actions are perfectly monitored, in stark contrast to canonical commitment payoff theorems. However, I identify tight conditions for the long-run player to attain their Stackelberg payoff in all Markov equilibrium. Along the way, I highlight the role of Markov strategies in pinning down the value of reputation formation. I apply my results to give conditional commitment foundations for the infinite chain-store game. I also analyze repeated global games with exit, and obtain new predictions about regime survival. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2404_18884 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Reputation in the Shadow of Exit Luo, Daniel Theoretical Economics I study reputation formation in repeated games where player actions endogenously determine the probability the game permanently ends. Permanent exit can render reputation useless even to a patient long-lived player whose actions are perfectly monitored, in stark contrast to canonical commitment payoff theorems. However, I identify tight conditions for the long-run player to attain their Stackelberg payoff in all Markov equilibrium. Along the way, I highlight the role of Markov strategies in pinning down the value of reputation formation. I apply my results to give conditional commitment foundations for the infinite chain-store game. I also analyze repeated global games with exit, and obtain new predictions about regime survival. |
| title | Reputation in the Shadow of Exit |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2404.18884 |