📝 SummarXiv

Abstract

I study reputation formation in repeated games where player actions endogenously determine the probability the game permanently ends. Permanent exit can render reputation useless even to a patient long-lived player whose actions are perfectly monitored, in stark contrast to canonical commitment payoff theorems. However, I identify tight conditions for the long-run player to attain their Stackelberg payoff in the unique Markovian equilibria. Along the way, I highlight the role of Markovian strategies in pinning down the value of reputation formation. I apply my results to repeated global games with exit, and obtain new predictions about regime survival and a dynamic foundation for risk dominant selection.