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Title: Occurrence of deception under the oversight of a regulator having reputation concerns
Authors: Özdoğan Atabay, Ayça
Keywords: Regulation
Repeated games
Inspection games
Short-lived agents
Issue Date: Oct-2016
Publisher: Birkhauser
Source: Özdog?an, A. (2016). Occurrence of Deception Under the Oversight of a Regulator Having Reputation Concerns. In Recent Advances in Game Theory and Applications (pp. 185-200). Birkhäuser, Cham.
Abstract: This paper studies deceptions conducted by agents in the presence of a regulator. The regulator is supposed to detect deviations from the “rightful” behavior through costly monitoring; thus she may not choose to be diligent in her job because of the associated costs. The goal is to understand the occurrence of deceptions when the interaction of the parties is not contractible, their behavior is not observable and the regulator has reputation concern for being perceived as diligent in a repeated incomplete-information setting. It is found that when the regulator faces a sequence of myopic agents, her payoff at any Nash equilibrium converges to the maximum payoff as the discount factor approaches to one for any prior belief on the regulator’s type. This suggests that, contrary to the well-known disappearance of reputation results in the literature, the reputation of the regulator for being diligent persists in the long-run in any equilibrium. These findings imply that socially undesirable behavior of the agents could be prevented through reputation concerns in this repeated setting.
ISBN: 9783319438375
Appears in Collections:İktisat Bölümü / Department of Economics
Scopus İndeksli Yayınlar Koleksiyonu / Scopus Indexed Publications Collection

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