Journal of Political Economy Vol. 132 No. 10 2024
Reputation Effects under Short Memories
Abstract
I analyze a reputation game between a patient player and a sequence of short-run players. Each short-run player observes the number of times that the patient player took each of his actions in the past K periods. When players have monotone supermodular payoffs, the patient player can approximately secure his commitment payoff in all equilibria regardless of K. I also show that the short-run players can approximately attain their highest feasible payoff in all equilibria if and only if K is lower than some cutoff. This is because a larger K weakens the short-run players’ incentives to punish the patient player.
- DOI
- 10.1086/730203
- Volume
- 132
- Issue
- 10
- Pages
- 3421-3460
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref