Reputation for Playing Mixed Actions: A Characterization Theorem
Theoretical Economics
2021-04-06 v2
Abstract
A patient player privately observes a persistent state that directly affects his myopic opponents' payoffs, and can be one of the several commitment types that plays the same mixed action in every period. I characterize the set of environments under which the patient player obtains at least his commitment payoff in all equilibria regardless of his stage-game payoff function. Due to interdependent values, the patient player cannot guarantee his mixed commitment payoff by imitating the mixed-strategy commitment type, and small perturbations to a pure commitment action can significantly reduce the patient player's guaranteed equilibrium payoff.
Cite
@article{arxiv.2006.16206,
title = {Reputation for Playing Mixed Actions: A Characterization Theorem},
author = {Harry Pei},
journal= {arXiv preprint arXiv:2006.16206},
year = {2021}
}