A reputation for honesty

We analyze situations where players build reputations for honesty rather than for playing particular actions. A patient player faces a sequence of short-run opponents. Before players act, the patient player announces their intended action after observing both a private payoff shock and a signal of what actions will be feasible that period. The patient player is either an honest type who keeps their word whenever their announced action is feasible, or an opportunistic type who freely chooses announcements and feasible actions. Short-run players only observe the current-period announcement and whether the patient player has kept their word in the past. We provide sufficient conditions under which the patient player can secure their optimal commitment payoff by building a reputation for honesty. Our proof introduces a novel technique based on concentration inequalities.(c) 2022 Elsevier Inc. All rights reserved.