Reputation with one-sided monitoring: ignorance as a commitment device

Abstract

I analyie a repeated two-sided incomplete information game with two long-run players in which only one of them can observe the history of the game. Using standard reputation arguments, I prove that if players are sufficiently patient, then the player with no monitoring device can secure a payoff arbitrarily close to her Stackelberg payoff; providing a novel form of equilibrium selection. (C) 2016 Elsevier B.V. All rights reserved.