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Chiara Margaria (Boston University)

27 April 2022 @ 12:00 - 13:15


  • Past event


27 April 2022
12:00 - 13:15
Event Category:
Academic Events

“A Signaling Approach to Reputation”


Abstract. We study reputation dynamics in a class of continuous-time signaling models with one-sided incomplete information. Public signals about the informed player’s type and his action are distorted by a Brownian noise. We show that all public perfect equilibria are Markov in the belief of the uninformed player and provide an equilibrium characterization as a solution to a system of ordinary differential equations for any fixed discount rate. In contrast to a setup with a commitment type, reputational incentives depend on the equilibrium behavior of the two types of informed players. In our setup, reputation is temporary: in any equilibrium, the type of the informed player is eventually revealed almost surely. We apply our characterization to a Cournot duopoly and investigate the behavior of a leader who knows the demand and engages in predatory behavior; we show that the value of reputation is non-monotone in the uninformed player’s belief.