Journal Article

Reputation in Long-Run Relationships

Alp E. Atakan and Mehmet Ekmekci

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 79, issue 2, pages 451-480
Published in print April 2012 | ISSN: 0034-6527
Published online September 2011 | e-ISSN: 1467-937X | DOI:
Reputation in Long-Run Relationships

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  • Game Theory and Bargaining Theory
  • Information, Knowledge, and Uncertainy


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We model a long-run relationship as an infinitely repeated game played by two equally patient agents. In each period, the agents play an extensive-form stage game of perfect information with either locally non-conflicting interests or strictly conflicting interests. There is incomplete information about the type of Player 1, while Player 2's type is commonly known. We show that a sufficiently patient Player 1 can leverage Player 2's uncertainty about his type to secure his highest pay-off, compatible with Player 2's individual rationality, in any perfect Bayesian equilibrium of the repeated game.

Keywords: Repeated games; Reputation; Equal discount factor; Long-run players; C73; D83

Journal Article.  15484 words.  Illustrated.

Subjects: Game Theory and Bargaining Theory ; Information, Knowledge, and Uncertainy

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