Reputation in Long-Run Relationships
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 game of perfect information. 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 payoff in any perfect Bayesian equilibrium of the repeated game.
Atakan, Alp Enver and Mehmet Ekmekci. Forthcoming. Reputation in Long-Run Relationships.