reputation with equal discounting in repeated games with strictly conflicting interests we analyze reputation effects in two player repeated games of strictly conflicting interests in such games player 1 has a commitment action such that a best reply to it gives player 1 the highest individually rational payoff and player 2 the minmax payoff players have equal discount factors with positive probability player 1 is a type who chooses the commitment action after every history we show that player 1 s payoff converges to the maximally feasible payoff when the discount factor converges to one this contrasts with failures of reputation effects for equal discount factors that have been demonstrated in the literature journal of economic literature classification number c71

durable goods monopolists durable goods monopolists face special problems because the sale of their products creates a secondhand market not controlled by the monopolist to the extent the monopolist is able to rent his product rather than sell it or to make binding promises about his future production such problems are ameliorated given the inability to do the above the monopolist is led to producing goods less durable than those produced by either competitive firms or monopolist returns a reverse averch johnson result that monopolist sellers may invest less in fixed costs including plant modernization and research and development than would the renters is shown it is also shown that even though sellers have less monopoly power than renters and nondurable goods monopolists it is possible that the seller will cause a greater deadweight loss than the other types of monopolies

a two sided reputation result with long run players abstract we establish reputation results under two sided incomplete information for a class of repeated games we consider a repeated game that satisfies the assumptions of either atakan and ekmekci 2012 3 or cripps et al 2005 6 and we assume that both players are stackelberg types with positive probability if the stage game is not a common interest game then equilibrium play converges to the unique equilibrium of a continuous time war of attrition as the stage game is repeated arbitrarily frequently alternatively if the stage game is a common interest game then the players equilibrium payoffs converge to their highest payoffs as the stage game is repeated arbitrarily frequently

reputation and dynamic stackelberg leadership in infinitely repeated games abstract the paper studies a repeated game in which a long run player without discounting faces another long run player with strict discounting the game is perturbed so that there is uncertainty in the patient player s strategy choice she may be a rational player but she may also be one of many irrational types who are committed to various repeated game strategies the rational patient player s equilibrium payoff in this perturbed game is analyzed in particular it is shown that the lower bound on her payoff in the set of extensive form trembling hand perfect equilibria is given by her stackelberg payoff in a dynamics sense journal of economic literature classification numbers c72 d82

costs of implementation bargaining costs versus allocative efficiency abstract a mechanism with low direct cost of use may be preferred to alternatives implementing more efficient allocations we show this experimentally by giving pairs of subjects the option to agree on a single average price for a sequence of trades in effect pooling several small bargains into a larger one we make pooling costly by tying it to some inefficient trades but subjects nevertheless reveal strong tendencies to pool particularly when more bargains remain to be struck and when bargaining is face to face the results suggest that implementation costs could play a significant role in the use of many common trading practices

reputation and perfection in repeated common interest games abstract we consider a wide class of repeated common interest games perturbed with one sided incomplete information one player the informed player might be a commitment type playing the pareto dominant action as discounting which is assumed to be symmetric and the prior probability of the commitment type go to zero it is shown that the informed player can be held close to her minmax payoff even when perfection is imposed on the equilibrium journal of economic literature classification numbers c73 d83

is there a threat effect of labour market programmes a study of almp in the danish ui system this article focuses on unemployed individuals reaction to compulsory labour market programmes prior to participation in denmark after having received ui benefits for a given period of time continued benefits are made conditional on participation in a labour market programme i estimate individuals reaction to compulsory programmes using legislative changes in the duration of benefits period as identification i find that compulsory programmes do indeed motivate individuals to find employment prior to participation the effect is large and is even comparable in size to the effect of benefits exhaustion found in studies of american ui systems

foundations of dynamic monopoly and the coase conjecture subgame perfect equilibria are characterized for a market in which the seller quotes a price each period assume zero costs positive interest rate continuum of buyers and some technical conditions if buyers valuations are positive then equilibrium is unique buyers strategies are stationary and the price sequence is determinant along the equilibrium path but possibly randomized elsewhere otherwise a continuum of stationary equilibria can exist but at most one with analytic strategies coase s conjecture is verified for stationary strategies reducing the period length drives all prices to zero or the least valuation connections to bargaining models are described journal qf economic literature classification

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

bargaining and reputation the paper develops a reputation based theory of bargaining the idea is to investigate and highlight the influence of bargaining postures on bargaining outcomes a complete information bargaining model a la rubinstein is amended to accommodate irrational types who are obstinate and indeed for tractability assumed to be completely inflexible in their offers and demands a strong independence of procedures result is derived after initial postures have been adopted the bargaining outcome is independent of the fine details of the bargaining protocol so long as both players have the opportunity to make offers frequently the latter analysis yields a unique continuous time limit with a war of attrition structure in the continuous time game equilibrium is unique and entails delay consequently inefficiency the equilibrium outcome reflects the combined influence of the rates of time preference of the players and the ex ante probabilities of different irrational types as the probability of irrationality goes to zero delay and inefficiency disappear furthermore if there is a rich set of types for both agents the limit equilibrium payoffs are inversely proportional to their rates of time preference

reputational bargaining with minimal knowledge of rationality two players announce bargaining postures to which they may become committed and then bargain over the division of a surplus the share of the surplus that a player can guarantee herself under first order knowledge of rationality is determined as a function of her probability of becoming committed as is the bargaining posture that she must announce in order to guarantee herself this much this maxmin share of the surplus is large relative to the probability of becoming committed e g it equals 30 if the commitment probability is 1 in 10 and equals 13 if the commitment probability is 1 in 1000 and the corresponding bargaining posture simply demands this share plus compensation for any delay in reaching agreement

no compromise uncertain costs in reputational bargaining abstract i show how uncertainty about agents future costs of delay can lead to substantial bargaining delays when agents have reputational concerns reputational concerns arise because with positive probability agents are behavioral types committed to demanding a fixed share of the surplus in equilibrium rational agents may demand almost the entire surplus and then wait with the deadlock only broken by the arrival of news about future costs even as the probability of behavioral types vanishes although both agents would benefit from a compromise reached immediately they do not propose such agreements because doing so would increase an opponent s option value of waiting

renegotiation and conflict resolution in relational contracting abstract renegotiation and conflict resolution are studied in relational contracting under subjective evaluation renegotiation has three effects first it makes the incentive pay scheme low powered the maximum variation of compensation across performance levels is compressed and the contract is less extreme compared to the case without renegotiation this effect is stronger when the players are less patient second renegotiation typically renders termination impossible the contract relies on a low morale mechanism to enforce mutual cooperation finally renegotiation compels the players to resolve their conflicts by selecting a contract that maximizes the lowest possible surplus along the path of the contract

bargaining with imperfect commitment abstract we study the effect of imperfect commitment in noncooperative two person bargaining games by establishing the reputation for being stubborn a player sometimes commits to her initial demand becoming unable to change her demands or to accept an inferior offer from her opponent when the probability of being stubborn is small the set of equilibria is shown to be small and agreement may be reached immediately despite the possibility of stubbornness a player has greater bargaining power when she is more patient and or is more likely to be stubborn journal of economic literature classification number c78

maintaining a reputation against a long lived opponent we consider a game between a patient player 1 and a nonmyopic but less patient opponent player 2 as usual in reputation models we suppose that the patient player s type is private information and that he may be a commitment type who is locked into playing a particular strategy we investigate the extent to which an uncommitted or normal type of patient player can exploit his less patient opponent s uncertainty to maintain a reputation for playing like a commitment type

is the threat of reemployment services more effective than the services themselves evidence from random assignment in the ui system we examine the effect of the worker profiling and reemployment services system this program profiles unemployment insurance ui claimants to determine their probability of benefit exhaustion and then provides mandatory employment and training services to claimants with high predicted probabilities using a unique experimental design we estimate that the program reduces mean weeks of ui benefit receipt by about 2 2 weeks reduces mean ui benefits received by about 143 ana increases subsequent earnings by over 1 050 most of the effect results from a sharp increase in early ui exits in the treatment group relative to the control group jel j650

reputation and patience in the war of attrition this article presents an approach to selecting among the many subgame perfect equilibria that exist in a standard concession game with complete information the authors extend the description of a game to include a specific irrational mixed strategy for each player depending on the irrational strategies chosen the authors demonstrate that this approach may select a unique equilibrium in which the weaker player concedes immediately a player is weaker if he is more impatient or if his irrational strategy is to wait in any period with the higher probability copyright 1989 by the london school of economics and political science

a letter to the editor on wage bargaining abstract the rubinstein perfect information alternating offers bargaining model is problematic when applied to wage negotiations a strike or any other industrial action is not an automatic consequence of a delay in reaching an agreement because production can continue normally also when negotiations take place this paper extends the rubinstein model to incorporate the choice of calling a strike and it is shown that in this model there is no longer a unique subgame perfect equilibrium and that strikes with a length in real time can occur in equilibrium

structurally dependent competing risks abstract in this paper we specify and estimate a structurally dependent competing risks model for the transitions out of unemployment into either new job or recall the recall probability is allowed to affect the search intensity for new jobs

gambling reputation repeated bargaining with outside options we study the role of incomplete information and outside options in determining bargaining postures and surplus division in repeated bargaining between a long run player and a sequence of short run players the outside option is not only a disagreement point but reveals information privately held by the long run player in equilibrium the uninformed short run players offers do not always respond to changes in reputation and the informed long run player s payoffs are discontinuous the long run player invokes inefficient random outside options repeatedly to build reputation to a level where the subsequent short run players succumb to his extraction of a larger payoff but he also runs the risk of losing reputation and relinquishing bargaining power we investigate equilibrium properties when the discount factor goes to 1 and when the informativeness of outside options diffuses in both cases bargaining outcomes become more inefficient and the limit reputation building probabilities are interior publication abstract

bargaining reputation and competition this paper addresses the question of whether playing the tough bargainer is a useful strategy for rational negotiators in competitive environments the unique equilibrium outcome of a continuous time multilateral bargaining game between a single seller and two buyers i e a three player war of attrition game show that it does not benefit the buyers the long side of the market if the probability of obstinacy is constant and independent of the initial demands this result is robust in the sense that the buyers heterogeneity about their flexibility does not weaken the intensity of the competition when the seller decides which buyer to negotiate first he not only chooses his bargaining partner but also picks his outside option the seller can strengthen his bargaining position against both buyers by picking the unattractive buyer who is greedier or tougher than the other buyer first and by leaving the attractive buyer aside because he starts the sequel with a strong outside option

bargaining and reputation in search markets in a two sided search market agents are paired to bargain over a unit surplus the matching market serves as an endogenous outside option for a bargaining agent behavioral agents are commitment types that demand a constant portion of the surplus the frequency of behavioral types is determined in equilibrium even if the frequency of behavioral types is negligible they aect the terms of trade and eciency in an unbalanced market where the entering

imperfect monitoring in communication networks individuals in many social networks imperfectly monitor other individuals network relationships this paper shows that in a model of a communication network imperfect monitoring leads to the existence of many inefficient equilibria reasonable restrictions on actions or on beliefs about others actions can however eliminate many of these inefficient equilibria even with imperfect monitoring star networks known to be efficient in many settings are shown to have desirable monitoring characteristics more generally this paper provides a formal framework in which to study incorrect perceptions as an equilibrium phenomenon in social networks

predation reputation and entry deterrence abstract economists often argue that predatory practices are irrational since there exist cheaper or more certain means to gain or maintain a monopoly our gametheoretic equilibrium analysis suggests that if a firm is threatened by several potential entrants then predation may be rational against early entrants even if it is costly when viewed in isolation because it yields a reputation which deters other entrants asymmetric information plays a crucial role in our analysis since it provides the rationale for entrants to base their expectations of the firm s future behavior on its past actions the analysis also suggests methods to treat general reputational phenomena

reputation and equilibrium characterization in repeated games with conflicting interests a two person game is of conflicting interests if the strategy to which player one would most like to commit herself holds player two down to his minimax payoff suppose there is a positive prior probability that player one is a commitme nt type who will always play this strategy then player one will get a t least her commitment payoff in any nash equilibrium of the repeated game if her discount factor approaches one this result is robust against further perturbations of the informational structure and in striking contrast to the message of the folk theorem for games with incomplete information copyright 1993 by the econometric society

the threat effect of active labour market programmes in this paper we estimate the threat effect of active labour market programmes almps for a sample of unemployed men in denmark threat effects of such programmes capture the impacts of a system of almps prior to actual participation rational economic agents make search decisions based on the expected discounted value of unemployment and the perceived risk of future participation in programmes may affect job search behaviour early in the unemployment spell we find a strong and significant threat effect which is shown to reduce average unemployment duration by two and a half weeks

evaluating the impact of french employment policies on individual labour market histories this paper deals with the evaluation of some public employment policies set up in france during the 1980 s to improve the labour market prospects of unskilled young workers the evaluation implemented in this paper is restricted to the impact of such public measures on durations and outcomes of subsequent spells of unemployment and employment the econometric study is conducted with non experimental longitudinal microdata recording individual labour nlarket histories a particular attention is paid to the differential effects of various types of measures according to the educational level of recipients programmes involving a higher level of on thejob training such as alternating work training programmes in private firms are principally beneficial to the less educated young workers in contrast for more educated young workers work fare programmes in the public sector decrease the intensity of transition from the subsequent unemployment spell to regular jobs for that subgroup work fare programmes may act as a signal of low employment performance

striking for a bargain between two completely informed agents this paper models the wage contract negotiation procedure between a union and a firm as a sequential bargaining process in which the union must decide in each period whether or not to strike for the duration of that period we show that there exist subgame perfect equilibria in which the union engages in several periods of strikes prior to reaching a final agreement although both parties are completely rational and fully informed this has implications for other inefficient phenomena such as tariff wars debt negotiations and wars in general we characterize the set of equilibria show that strikes can occur in real time and discuss extensions of the model such as lockouts and the possibility of multiple recontracting opportunities copyright 1991 by american economic association

bargaining reputation and equilibrium selection in repeated games with contracts consider a two person intertemporal bargaining problem in which players choose actions and offers each period and collect payoffs as a function of that period s actions while bargaining proceeds this can alternatively be viewed as an infinitely repeated game wherein players can offer one another enforceable contracts that govern play for the rest of the game theory is silent with regard to how the surplus is likely to be split because a folk theorem applies perturbing such a game with a rich set of behavioral types for each player yields a specific asymptotic prediction for how the surplus will be divided as the perturbation probabilities approach zero behavioral types may follow nonstationary strategies and respond to the opponent s play in equilibrium rational players initially choose a behavioral type to imitate and a war of attrition ensues how much should a player try to get and how should she behave while waiting for the resolution of bargaining in both respects she should build her strategy around the advice given by the nash bargaining with threats nbwt theory developed for two stage games in any perfect bayesian equilibrium she can guarantee herself virtually her nbwt payoff by imitating a behavioral type with the following simple strategy in every period ask for and accept nothing less than that player s nbwt share and while waiting for the other side to concede take the action nash recommends as a threat in his two stage game the results suggest that there are forces at work in some dynamic games that favor certain payoffs over all others this is in stark contrast to the classic folk theorems to the further folk theorems established for repeated games with two sided reputational perturbations and to the permissive results obtained in the literature on bargaining with payoffs as you go

on the role of outside options in bargaining with obstinate parties the presence of obstinate types in bargaining has been shown to alter dramatically the bargaining equilibrium strategies and outcomes this paper shows that outside options may cancel out the effect of obstinacy in bargaining when parties have access to stationary outside options we show that when opting out is preferable to accepting the inflexible demand of the other party there is a unique perfect bayesian equilibrium in which each party reveals himself as rational as soon as possible a similar conclusion holds when outside options may only be available at a later date or when only one party has access to an outside option

reputation and equilibrium selection in games with a patient player a single long run player plays a simultaneous move stage game against a sequence of opponents who play only once but observe all previous play let the stackelberg strategy be the pure strategy to which the long run player would most like to commit himself if there is positive prior probability that the long run player will always play the stackelberg strategy then his payoff in any nash equilibrium exceeds a bound that converges to the stackelberg payoff as his discount factor approaches one when the stage game is not simultaneous move this result must be modified to account for the possibility that distinct strategies of the long run player are observationally equivalent

indeterminacy of reputation effects in repeated games with contracts abstract we study whether allowing players to sign binding contracts governing future play leads to reputation effects in repeated games with long run players we proceed by extending the analysis of abreu and pearce 2007 by allowing for the possibility that different behavioral types may not be immediately distinguishable from each other given any prior over behavioral types we construct a modified prior with the same total weight on behavioral types and a larger support under which almost all efficient feasible and individually rational payoffs are attainable in perfect bayesian equilibrium thus whether reputation effects emerge in repeated games with contracts depends on details of the prior distribution over behavioral types other than its support

reputational bargaining and deadlines i highlight how reputational concerns provide a natural explanation for deadline effects the high frequency of deals prior to a deadline in bargaining rational agents imitate the demands of obstinate behavioral types and engage in brinkmanship in the face of uncertainty about the deadline s arrival i also identify how surplus is divided when the prior probability of behavioral types is vanishingly small if behavioral types are committed to fixed demands outcomes converge to the nash bargaining solution regardless of agents respective impatience if behavioral types can adopt more complex demand strategies outcomes converge to the solution of an alternating offers game without behavioral types for the deadline environment

the effect of active labor market programs on not yet treated unemployed individuals labor market programs may affect unemployed individuals behavior before they enroll such ex ante effects are hard to identify without model assumptions we develop a novel method that relates self reported perceived treatment rates and job search behavioral outcomes like the reservation wage to each other among newly unemployed workers job search theory is used to derive theoretical predictions to deal with effect heterogeneity and selectivity the effects of interest are estimated by propensity score matching we apply the method to the german active labor market program system using a novel data set including self reported assessments of the variables of interest as well as unusually detailed information on behavior attitudes and past outcomes we find that the system generates a negative ex ante effect on the reservation wage and a positive effect on search effort jel j64 c21 d83 d84

perfect equilibria in a negotiation model rubinstein s alternating offers bargaining model is enriched by assuming that players payoffs in disagreement periods are determined by a normal form game it is shown that such a model can have multiple perfect equilibria including inefficient ones provided that players are sufficiently patient delay is possible even though there is perfect information and the players are fully rational the length of delay depends only on the payoff structure of the disagreement game and not on the discount factor not all feasible and individually rational payoffs of the disagreement game can be supported as average disagreement payoffs indeed some negotiation games have a unique perfect equilibrium with immediate agreement

partial unemployment insurance benefits and the transition rate to regular work abstract in finland unemployed workers who are looking for a full time job but take up a part time or very short full time job may qualify for partial unemployment benefits in exchange for partial benefits these applicants must continue their search of regular full time work this study analyzes the implications of working on partial benefits for subsequent transitions to regular employment the timing of events approach is applied to distinguish between causal and selectivity effects associated with the receipt of partial benefits the results suggest that partial unemployment associated with short full time jobs facilitates transitions to regular employment also part time working on partial benefits may help men but not women in finding a regular job afterwards