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Reputation When Threats and Transfers Are Available
We present a model where a long run player is allowed to use both money transfers and threats to influence the decisions of a sequence of short run players. We show that threats might be used credibly (even in arbitrarily short repeated games) by a long‐lived player who gains by developing a reputat...
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Published in: | Journal of economics & management strategy 2007-09, Vol.16 (3), p.577-598 |
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Main Authors: | , , |
Format: | Article |
Language: | English |
Subjects: | |
Citations: | Items that this one cites Items that cite this one |
Online Access: | Get full text |
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Summary: | We present a model where a long run player is allowed to use both money transfers and threats to influence the decisions of a sequence of short run players. We show that threats might be used credibly (even in arbitrarily short repeated games) by a long‐lived player who gains by developing a reputation of carrying out punishments. Particular cases of the model are a long‐lived pressure group offering rewards and punishments to a series of targets (public or corporate officials) in exchange for policy favors, or that of a long‐lived extorter who demands money in order not to punish. We use the model to analyze the “convicted nonpayor” debate around judicial corruption. The model highlights formal similarities between lobbying and extortion. |
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ISSN: | 1058-6407 1530-9134 |
DOI: | 10.1111/j.1530-9134.2007.00151.x |