UCL Department of Economics


Theoretical and Behavioural Economics Seminar - Harry Pei (Northwestern)

12 March 2024, 4:30 pm–6:00 pm

UCL quad with a camera in the foreground

Reputation Effects with Endogenous Records

Event Information

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Duarte Gonçalves/Deniz Kattwinkel

Abstract:  A patient player interacts with a sequence of short-run players. The patient player is either an honest type who always takes a commitment action and never erases any record, or an opportunistic type who decides which action to take and whether to erase that action from his record at a low cost. We show that the patient player will have an incentive to build a reputation in every equilibrium and can secure a payoff that is strictly greater than his commitment payoff after accumulating a long enough good record. However, as long as the patient player has a sufficiently long lifespan, his equilibrium payoff must be close to his minmax value. Although a small probability of opportunistic type can wipe out all of the patient player’s returns from building reputations, it only has a negligible effect on the short-run players’ welfare.

Location: B03 Ricardo LT, Drayton House