reputation and impermanent types i consider a version of the chain store game where the incumbent firm s type evolves according to a markov process with two states a tough type who always fights entry and a weak type who prefers to accommodate there exists a minimal level of persistence necessary for the incumbent to be able to sustain any reputation for being tough above that level as the number of markets t increases in equilibrium play alternates between intervals of entry by competitors and intervals of deterrence when t is infinite then regardless of the discount factor there exists a sequential equilibrium in which the incumbent s payoff is bounded below her stackelberg payoff both results are in contrast to the outcome when the incumbent s type is fixed one interpretation is that reputation is not permanent but must be renewed occasionally

default settlement and signalling lending resumption in a reputational model of sovereign debt this paper develops a simple model of sovereign debt in which defaulting nations are excluded from capital markets and regain access by making partial repayments this implication of the model is consistent with the historical evidence that defaulting countries return to international loan markets soon after a settlement but after varying periods of exclusion copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

reputation and exogenous private learning abstract short run competitors in the chain store game receive noisy signals of the long run incumbent firm s type the history of signals which in the limit is fully revealing is observable to the competitors but possibly not to the incumbent as long as there is sufficient noise in the signals then in any equilibrium a patient weak incumbent obtains a payoff strictly higher than her minmax payoff

on the incentive effects of job rotation abstract a new employee may work hard to build his reputation this effect is greatest when he starts the longer he is employed at his job the more the firm will already have learned about his ability the incentives for an employee to influence the firm s perceptions of his ability decrease over time if rotating the employee to a different job leads to new uncertainty about his ability this generates a fresh impulse for effort however job rotation also reduces the employee s time horizon thus reducing future rents from reputation this trade off leads to a unique optimum we derive a simple rule of thumb for an optimal rotation time our main results still hold for cases of complete but imperfect information transmission the incentive effects of job rotation also prevail in a setting in which skills are job specific we study several extensions rotations across multiple employees absence of commitment to a rotation time different bargaining positions discounting over time and learning by doing effects

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

impermanent types and permanent reputations we study the impact of unobservable stochastic replacements for the long run player in the classical reputation model with a long run player and a series of short run players we provide explicit lower bounds on the nash equilibrium payoffs of a long run player both ex ante and following any positive probability history under general conditions on the convergence rates of the discount factor to one and of the rate of replacement to zero both bounds converge to the stackelberg payoff if the type space is sufficiently rich these limiting conditions hold in particular if the game is played very frequently

managerial incentive problems a dynamic perspective the paper studies how a person s concern for a future career may influence his or her incentives to put in effort or make decisions on the job in the model the person s productive abilities are revealed over time through observations of performance there are no explicit output contingent contracts but since the wage in each period is based on expected output and expected output depends on assessed ability an implicit contract links today s performance to future wages an incentive problem arises from the person s ability and desire to influence the learning process and therefore the wage process by taking unobserved actions that affect today s performance the fundamental incongruity in preferences is between the individual s concern for human capital returns and the firm s concern for financial returns the two need be only weakly related it is shown that career motives can be beneficial as well as detrimental depending on how well the two kinds of capital returns are aligned it is well understood by now that informational externalities may place special demands on the organization of economic exchange simple price mediated markets will frequently fail in the presence of asymmetric information in that case more elaborate contractual arrangements have to be used as substitutes for the price system lately considerable effort has been devoted to the analysis of contracting under incomplete information with the objective to understand the range of economic institutions that emerge in response to the failure of the price system the analysis of moral hazard has played a prominent role in this development moral hazard problems arise when for some reason or another transacting parties cannot contract contingent on the delivery of the good for instance in buying labour services it may be that the amount of labour supplied is not directly observable precluding a simple exchange of wage for labour as a partial remedy to this problem an imperfect mutually observed signal about the supply of labour can be used as a proxy in the contract frequently output is taken as such a proxy the drawback is that output is often influenced by other factors than labour input which induce undesirable risk into the contract one is therefore faced with a tradeoff between allocating risk associated with incomplete observability and providing incentives for a proper supply of labour gaining insight into this tradeoff is important not only for understanding contracting in the small e g managerial incentive schemes but also because it is closely related to the fundamental tension between equity and efficiency in the society as a whole while our understanding of moral hazard has advanced a lot in past years it is clear that much work remains an important question that has received little attention until

balanced budget redistribution as the outcome of political competition this paper models balanced budget redistribution between socio economic groups as the outcome of electoral competition between two political parties equilibrium is unique in the present model and a sufficient condition for existence is given requiring that there be enough stochastic heterogeneity with respect to party preferences in the electorate the validity of hotelling s principle of minimum differentiation and of director s law are examined under alternative hypotheses concerning administrative costs of redistributions and voter s possibilities both of abstaining from voting and of becoming campaign activists for one of the parties the policy strategy of expected plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality incomes are fixed and known so lump sum taxation is feasible however constraints on tax transfer differentiation between individuals are permitted in the analysis

market aspects in product life cycle inventory methodology abstract in planning a product life cycle inventory analysis the correct choice of methodology often depends on market information this paper discusses a number of points in the life cycle inventory methodology choice of product alternatives geographical system boundaries technological levels and co product allocation rules where the market aspect becomes obvious and where a disregard for these aspects may lead to serious flaws in the results

imperfect monitoring and impermanent reputations we study the long run sustainability of reputations in games with imperfect public monitoring it is impossible to maintain a permanent reputation for playing a strategy that does not play an equilibrium of the game without uncertainty about types thus a player cannot indefinitely sustain a reputation for noncredible behavior in the presence of imperfect monitoring

the folk theorem with imperfect public information the authors study repeated games in which players observe a public outcome that imperfectly signals the actions played they provide conditions guaranteeing that any feasible individually rational payoff vector of the stage game can arise as a perfect equilibrium of the repeated game with sufficiently little discounting the central condition requires that there exist action profiles with the property that for any two players no two deviations one by either player give rise to the same probability distribution over public outcomes the results apply to principal agent partnership oligopoly and mechanism design models and to one shot games with transferable utilities copyright 1994 by the econometric society

limited records and reputation bubbles abstract this paper offers a tractable and fully rational model to study the economics of reputation in a dynamic market with limited record keeping i e a market in which new entrants observe only the last few periods of play of the long run player instead of the full history of the market we show that trust is gradually granted to the opportunistic long run player despite the fact that his type is perfectly observed by the short run opponents and the perfectly informed short run players ride and drive up reputation bubbles at the expense of their uninformed successors we characterize equilibrium payoffs uniformly over time which is useful for analyzing ongoing repeated relationships where the starting moments have passed

the impact of the rebound effect of the use of first generation biofuels in the eu on greenhouse gas emissions a critical review an important objective of the mandated blending of biofuel in conventional gasoline and diesel in the eu is reducing greenhouse gas ghg emissions an important assumption thereby is that biofuels replace the production and consumption of oil however recent literature challenges this assumption because an increased use of biofuels will lower oil prices and therefore result in increase crude oil consumption this so called rebound effect offsets the expected ghg emission saving effects of using biofuels a review of eight studies mainly on current and future us biofuel policies provides insights in the current state of research into this topic showing a wide range of values of the rebound effect of biofuel use depending among others on the biofuel policy the applied method and the model parameter assumptions generally estimated rebound effects are negative in the country where biofuel use is being promoted i e the use of 1 unit of biofuel reduces oil consumption by less than 1 unit units on energy basis the rebound effects in other countries are always positive biofuel use reduces oil consumption by less than 1 unit so the total fuel consumption is increasing the net global rebound effect is usually positive which means that ghg emissions savings are not achieved as much as usually is assumed or emissions may even increase own estimations with the global magnet computable general equilibrium model indicate a global rebound effect of the 10 biofuel blend mandate in the eu in the year 2020 of 22 30 i e the use of 1 unit of biofuel reduces global oil consumption by 0 78 0 70 units this means that ghg emissions will not be reduced as much as usually is assumed or may even increase these results show that rebound effects can significantly lower the effectiveness of biofuel policies in reducing ghg emissions

information revelation in relational contracts we explore subjective performance reviews in long term employment relationships we show that firms benefit from separating the task of evaluating the worker from the task of paying him the separation allows the reviewer to better manage the review process and can therefore reward the worker for his good performance with not only a good review contemporaneously but also a promise of better review in the future such reviews spread the reward for the worker s good performance across time and lower the firm s maximal temptation to renege on the reward the manner in which information is managed exhibits patterns consistent with a number of well documented biases in performance reviews

maintaining a reputation when strategies are imperfectly observed this paper studies reputation effects in games with a single long run player whose choice of stage game strategy is imperfectly observed by his opponents we obtain lower and upper bounds on the long run player s payoff in any nash equilibrium of the game if the long run player s stage game strategy is statistically identified by the observed outcomes then for generic payoffs the upper and lower bounds both converge as the discount factor tends to 1 to the long run player s stackelberg payoff which is the most he could obtain by publicly committing himself to any strategy

restricted feedback in long term relationships abstract this paper studies long term relationships modeled as repeated games with restricted feedback players condition current play on summary statistics of past play rather than the entire history as may be the case in online markets our state strategy equilibrium framework allows for arbitrary restrictions on strategies we derive a recursive characterization for the set of equilibrium payoffs similar to that of abreu pearce and stacchetti 1986 1990 2 3 for perfect public equilibria and show that the set of equilibrium payoffs is the largest fixed point of a monotone operator we use our characterization to derive necessary and sufficient conditions for efficient trade in a repeated product choice game where costumers condition their purchase decisions only on the last performance signal

reputation and survival learning in a dynamic signalling model we consider the impact of reputation on the survival of a monopolist selling single units in discrete time periods whose quality is learned slowly if the seller learns her own quality at the same rate as customers a sufficiently bad run of luck could induce her to stop selling when she knows her quality a good seller never stops selling though at low reputations a bad seller does with some probability furthermore a seller with positive though imperfect information sells for the same number of periods whether her information is private or public we further consider the robustness of the central result when the seller s opportunities for strategic behaviour are limited

disappearance of reputations in two sided incomplete information games abstract this paper examines the sustainability of reputations in a class of games with imperfect public monitoring and two long lived players both of whom have private information about their own type and uncertainty over the types of the other player this class namely reputation games with one sided moral hazard can capture economic interactions that may involve hidden information or hidden action extending the techniques of cripps et al 2004 it is found that neither player can sustain a reputation permanently for playing a noncredible behavior in these games and the reputations disappear uniformly across all nash equilibria

a game theoretic model for the role of reputation feedback systems in peer to peer commerce abstract we propose a dynamic game theoretic model to study how a reputation feedback system affects a peer to peer p2p trading platform continuums of buyers and sellers with bounded rationalities are paired to trade periodically sellers have private knowledge on their own types that encode tendencies to cheat their reputation scores are on the other hand visible to all and periodically updated by their trading partners a buyer can use a seller s score to assess the latter s characters and decide whether to trade using a continuity based fixed point theorem we first establish the existence of equilibria that convey information on traders behaviors as well as the type score composition on the market we then look into a special case which for model tractability includes two types of sellers with two score levels besides the proportion of prone to cheating sellers it indicates that how much sellers value their future payoffs also plays a major role in determining the prevalence of online frauds therefore reputation feedback systems are especially beneficial under high trading volumes which can in turn for instance be facilitated by attracting more buyers to the online marketplace

sustainable reputations with rating systems abstract in a product choice game played between a long lived seller and an infinite sequence of buyers we assume that buyers cannot observe past signals to facilitate the analysis of applications such as online auctions e g ebay online shopping search engines e g bizrate com and consumer reports we assume that a central mechanism observes all past signals and makes public announcements every period the set of announcements and the mapping from observed signals to the set of announcements is called a rating system we show that absent reputation effects information censoring cannot improve attainable payoffs however if there is an initial probability that the seller is a commitment type that plays a particular strategy every period then there exists a finite rating system and an equilibrium of the resulting game such that the expected present discounted payoff of the seller is almost his stackelberg payoff after every history this is in contrast to cripps mailath and samuelson 2004 5 where it is shown that reputation effects do not last forever in such games if buyers can observe all past signals we also construct finite rating systems that increase payoffs of almost all buyers while decreasing the seller s payoff

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

community enforcement of trust with bounded memory we examine how trust is sustained in large societies with random matching when records of past transgressions are retained for a finite length of time to incentivize trustworthiness defaulters should be punished by temporary exclusion however it is profitable to trust defaulters who are on the verge of rehabilitation with perfect bounded information defaulter exclusion unravels and trust cannot be sustained in any purifiable equilibrium a coarse information structure that pools recent defaulters with those nearing rehabilitation endogenously generates adverse selection sustaining punishments equilibria where defaulters are trusted with positive probability improve efficiency by raising the proportion of likely re offenders in the pool of defaulters

is more information always better a case in credit markets this paper studies the impact of behavioral and non behavioral information contained in consumer credit reports on the credit market a repeated game of incomplete information between a borrower and a sequence of lenders is considered lenders beliefs regarding the borrower s type depend on the borrower s historical loan performance and other informative signals it is established that for low beliefs strategic defaults occur in equilibrium as the borrower defaults on his loans despite having the ability to repay them further as the ancillary signals become increasingly informative of the borrower s type the range of beliefs over which strategic defaults occur expands this increase in strategic defaults highlights an unintended negative effect of allowing informative signals to influence beliefs on the upside the informative signals allow lenders to learn the borrower s type more quickly

ideology tactics and efficiency in redistributive politics we model the electoral politics of redistribution when voters and parties care about inequality in addition to their private concerns for consumption and votes respectively ideological concerns about income redistribution lead each party to adopt a general proportional income tax adjusted to appeal to the ideological leanings of high clout groups with disproportionately many swing voters which the parties also ply with pork barrel projects our results relate to director s law which says that redistributive politics favors middle classes at the expense of both rich and poor

comparative analysis of attributional corporate greenhouse gas accounting consequential life cycle assessment and project policy level accounting a bioenergy case study abstract in order to avoid dangerous climate change greenhouse gas accounting methods are needed to inform decisions on mitigation action this paper explores the differences between attributional and consequential greenhouse gas accounting methods focusing on attributional corporate greenhouse gas inventories consequential life cycle assessment and project policy greenhouse gas accounting the case study of a 6 mw bioheat plant is used to explore the different results and information these methods provide the findings show that attributional corporate inventories may not capture the full consequences of the decision in question even with full scope 3 reporting and are therefore not sufficient for mitigation planning although consequential life cycle assessment and the project policy level method both aim to show the full consequences of the decision the project policy level method has a number of advantages including the provision of a transparent baseline scenario and the distribution of emissions removals over time the temporal distribution of emissions removals is important as the carbon debt of the bioheat plant can exceed 100 years making the intervention incompatible with 2050 reduction targets an additional contribution from the study is the use of normative decision theory to further develop the idea that the uncertainty associated with bioenergy outcomes is itself a highly decision relevant finding

consequential life cycle assessment of bioenergy systems a literature review abstract policies and business decisions intended to promote the use of bioenergy should be based on accurate estimates of the sustainability impacts of various alternatives including indirect consequences of any change consequential life cycle assessment clca attempts to include such impacts in the analysis this paper reviews studies that have adopted a clca approach to analysing the use of bioenergy describing their main topics approaches empirical and methodological aspects and scenarios the review finds that the production of studies proceeded at a modest pace from 2007 with a significant increase occurring from 2015 onward the most studied impact is global warming potential gwp although other impacts are frequently taken into consideration a majority of the studies concern the agricultural followed by the forest sector the literature has a european emphasis and relatively few studies have focused on low and middle income countries the review also finds a diversity in terms of how empirical and methodological aspects are taken into consideration based on the findings of the review areas of improvement for future research are suggested an increased focus on bioenergy use in the household sectors more studies in under researched regions more precise explanations of the clca methods used a critical examination of the scenarios and methodological collaboration with economic bio sector modelling in addition the factors that affect the generalizability of the results can be discussed in a more systematic manner frameworks and procedures for improving the applicability and validity of clca will likely emerge as the research field develops

is more information always better experimental financial markets with cumulative information abstract we study the value of information in financial markets by asking whether having more information always leads to higher returns we address this question in an experiment where information about an asset s intrinsic value is cumulatively distributed among traders we find that only the very best informed traders i e insiders significantly outperform less informed traders however there is a wide range of information levels from zero information to above average information levels where additional information does not yield higher returns the latter result implies that the value of additional information need not be strictly positive

information acquisition and reputation dynamics we study dynamic incentives and behaviour in markets with costly discovery of past transactions in our model a sequence of short lived customers interact over time with a single long lived firm that privately knows its type good or opportunistic customers must pay to observe the firm s past behaviour we characterize the equilibrium structure that features accumulation consumption and restoration of reputation the opportunistic firm deliberately builds its reputation up to a point where the maximum periods of information acquired by customers do not reveal past opportunistic behaviour and exploits the customers who most trust the firm copyright 2011 oxford university press

public trust and government betrayal abstract this study presents a simple model of government reputation in which government type cannot be directly observed by households with the variation that government type rather than being permanent follows an exogenous markov process this formulation captures three characteristics of bad policy outcomes governments which betray public trust do so erratically public trust is regained only gradually after a betrayal and governments with recent betrayals betray with higher probability than other governments

who wants a good reputation we examine a market in which long lived firms face a short term incentive to exert low effort but could earn higher profits if it were possible to commit to high effort there are two types of firms inept firms who can only exert low effort and competent firms who have a choice between high and low effort there is occasional exit and competent and inept potential entrants compete for the right to inherit the departing firm s reputation consumers receive noisy signals of effort choice and so competent firms choose high effort in an attempt to distinguish themselves from inept firms a competent firm is most likely to enter the market by purchasing an average reputation in the hopes of building it into a good reputation than either a very low reputation or a very high reputation inept firms in contrast find it more profitable to either buy high reputations and deplete them or buy low reputations

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

transposing lessons between different forms of consequential greenhouse gas accounting lessons for consequential life cycle assessment project level accounting and policy level accounting abstract greenhouse gas accounting has developed in a number of semi isolated fields of practice and there appears to be considerable opportunity for transposing methodological innovations and lessons between these different fields this research paper identifies three consequential forms of greenhouse gas accounting consequential life cycle assessment project level accounting and policy level accounting these methods are described in detail and then compared in order to identify the key methodological differences and the potential lessons that can be transposed between them analysis of the substantive methodological differences suggests that consequential life cycle assessment could be enhanced by adopting the same structure used in project and policy level accounting which provides a time series of impacts aggregate level analysis and a transparent specification of the baseline and decision scenarios there is a case for conceptualising a unified form of consequential time series assessment of which project policy and product assessments would be sub types

on market mediated emissions and regulations on life cycle emissions abstract we analyze the use of life cycle assessment lca as a regulatory tool using biofuel regulations as an illustrative example a regulatory context calls for a consequential lca clca of a policy as opposed to an attributional lca alca of a product in performing clca issues of scale price effects technology and policy in the counterfactual state of the world strategic behavior policy horizon etc need consideration this appears to increase both uncertainty in estimates and the cost of performing lca we suggest heuristics for determining vulnerability to harmful indirect effects at an early stage in the policy process and discuss alternative policies to limit harmful indirect effects without engaging in the full effort of computation and selection of a central estimate for uncertain outcomes

entrants reputation and industry dynamics this article analyzes entry exit decisions in a market where reputation determines the price that firms may charge within a rational expectation model of competition in a nonatomic market under heterogeneous reputations the analysis focuses on the class of name switching reputational equilibria in which a firm discards its name if and only if its reputation falls below the entrants reputation the main technical result is the existence of a unique steady state equilibrium within this class in which the entrants reputation is endogenous the resulting industry dynamics is largely on agreement with the findings in the empirical literature

woody biomass energy potential in 2050 abstract from a biophysical perspective woody biomass resources are large enough to cover a substantial share of the world s primary energy consumption in 2050 however these resources have alternative uses and their accessibility is limited which tends to decrease their competitiveness with respect to other forms of energy hence the key question of woody biomass use for energy is not the amount of resources but rather their price in this study we consider the question from the perspective of energy wood supply curves which display the available amount of woody biomass for large scale energy production at various hypothetical energy wood prices these curves are estimated by the global biosphere management model globiom which is a global partial equilibrium model of forest and agricultural sectors the global energy wood supply is estimated to be 0 23 gm 3 year 0 165 ej year when energy wood prices vary in a range of 0 30 gj 0 216 m 3 if we add household fuelwood to energy wood then woody biomass could satisfy 2 18 of world primary energy consumption in 2050 if primary forests are excluded from wood supply then the potential decreases up to 25