When is Reputation Bad?

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When is Reputation Bad?

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Title: When is Reputation Bad?
Author: Levine, David; Ely, Jeffrey; Fudenberg, Drew

Note: Order does not necessarily reflect citation order of authors.

Citation: Ely, Jeffrey, Drew Fudenberg, and David K. Levine. 2008. When is reputation bad? Games and Economic Behavior 63, no. 2: 498-526.
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Abstract: In traditional reputation models, the ability to build a reputation is good for the long-run player. In [Ely, J., Valimaki, J., 2003. Bad reputation. NAJ Econ. 4, 2; http://www.najecon.org/v4.htm. Quart. J. Econ. 118 (2003) 785–814], Ely and Valimaki give an example in which reputation is unambiguously bad. This paper characterizes a class of games in which that insight holds. The key to bad reputation is that participation is optional for the short-run players, and that every action of the long-run player that makes the short-run players want to participate has a chance of being interpreted as a signal that the long-run player is “bad.” We allow a broad set of commitment types, allowing many types, including the “Stackelberg type” used to prove positive results on reputation. Although reputation need not be bad if the probability of the Stackelberg type is too high, the relative probability of the Stackelberg type can be high when all commitment types are unlikely.
Published Version: http://dx.doi.org/10.1016/j.geb.2006.08.007
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:3196337

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  • FAS Scholarly Articles [8087]
    Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University

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