Imitation and Selective Matching In Reputational Games

Abstract

This paper investigates imitation and selective matching in reputational games with an outside option. We identify two classes of such games, which are ultimatum and trust games. By selective matching we mean that short-run players have the possibility of selecting the long-run player they play against. We find that selective matching (unlike random matching) favors the equilibrium associated to reputation in the ultimatum game but not in the trust game