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Reputation and Conflict

By Sandeep Baliga and Tomas Sjostrom


Suppose players engage in conflict twice. If actions are strategic complements, players initially play less aggressively to signal they are “soft” and increase the chance of cooperation later. In this case, repetition of the game increases cooperation as in many standard models of reputation. If actions are strategic substitutes and the game is repeated, players play more aggressively initially to signal they are “tough” to get their opponent to back off in the future. We discuss motives for deception when players do not know if actions are strategic complements or substitutes for their opponent. Finally, we compare the relative aggressiveness of democracies and dictatorships when democratic leaders may not be renewed between di¤erent rounds but dictators are

Year: 2009
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