PER Distinguished Lecture: George Mailath
PER Distinguished Lecture Series: George Mailath
Friday, April 1, 2016
1027 International Affairs Building
"The Canonical Reputation Model and Reputation Effects"
Part I: 10:30am-12:00pm
Part II: 1:00pm-2:30pm
Repeated games have many equilibria, including the repetition of stage game Nash equilibria. At the same time, particularly when monitoring is imperfect, certain plausible outcomes are not consistent with equilibrium. Reputation effects is the term used for the impact upon the set of equilibria (typically of a repeated game) of perturbing the game by introducing incomplete information of a particular kind. Specifically, the characteristics of a player are not public information, and the other players believe it is possible that the distinguished player is a type that necessarily plays some action (typically the Stackelberg action). Reputation effects fall into two classes: “Plausible” phenomena that are not equilibria of the original repeated game are equilibrium phenomena in the presence of incomplete information, and “implausible” equilibria of the original game are not equilibria of the incomplete information game. As such, reputation effects provide an important qualification to the general indeterminacy of equilibria. I will give a brief introduction to reputation effects in the canonical model of Fudenberg and Levine (1989, 1992), using the tool of relative entropy introduced by Gossner (2011), and the temporary reputation result of Cripps, Mailath, and Samuelson (2004, 2007).