Group reputations under anonymity

Abstract

This paper studies incentives to invest in 'group reputations' when the latter result from the inability of certain agents to recognize their partners from past interactions; (i.e., anonymity). It does this by embedding the Kreps-Wilson model of reputation and entry deterrence in a random matching game (instead of just looking at isolated bilateral interactions). The paper shows how the presence of this type of 'reputational externality' modifies the development of reputations under varying assumptions about how information is shared among agents, with and without discounting. In particular, it shows how anonymity might. completely prevent the development of reputations, regardless of the trading horizon, if payoffs are discocounted, and contemporaneous entrants share information while incumbents do not.