Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296363 
Year of Publication: 
2022
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 17 [Issue:] 2 [Year:] 2022 [Pages:] 539-559
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
We study dynamic signaling in a game of stochastic stakes. Each period, a privately informed agent of binary type chooses whether to continue receiving a return that is an increasing function of both her reputation and an exogenous public stakes variable or to irreversibly exit the game. A strong type has a dominant strategy to continue. In the unique perfect Bayesian equilibrium, the weak type plays a mixed strategy that depends only on current stakes and their historical minimum, and she builds a reputation by continuing when the stakes reach a new minimum. We discuss applications to corporate reputation management, online vendor reputation, and limit pricing with stochastic demand.
Subjects: 
Dynamic signaling
reputation building
history dependence
exit dynamics
JEL: 
C73
D82
D83
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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