Essays on reputation

Abstract

This dissertation examines reputation, the belief of the decision maker about types of advisors, in incomplete information games with multiple advisors. The decision maker believes that an advisor can be one of two types – an advisor who is biased towards suggesting any particular advice (bad advisor) or an advisor who has the same preferences as the decision maker (good advisor). I explain why it is not always beneficial for the decision maker to seek advice from two advisors simultaneously compared to seeking advice from a single advisor. It is shown that a strong concern for one’s reputation not to be perceived as a bad advisor can make the good advisor sometimes give wrong advice. Also, if each type of advisor considers his future important, the decision maker is better off having a single advisor. Then I show that, when dealing with two advisors, it is better for the decision maker to seek advice simultaneously since the possibility of obtaining information is lower in sequential cheap talk. I also examine how an individual’s perception of what he thinks of himself (self-reputation) and what others think of him regarding his ability to resist temptation (perception of reputation) affect his actions. It is shown that higher self-reputation and higher perception of reputation help in making resolutions and keeping up with them both in the short and the long run. However, this result requires that individuals find it relatively easy to resist temptation. Also, even those who find it hard to resist temptation can sustain their resolution after telling friends about the resolution in the short run if they value the future more than the present.