REPUTATION IN THE LONG-RUN WITH IMPERFECT MONITORING 1 Alp E. Atakan and Mehmet Ekmekci We study an infinitely repeated game where two players with equal discount factors play a simultaneous-move stage game. Player one monitors the stage-game actions of player two imperfectly, while player two monitors the pure stage-game actions of player one perfectly. Player one’s type is private information and he may be a “commitment type,” drawn from a countable set of commitment types, who is locked into playing a particular strategy. Under a full-support assumption on the monitoring structure, we prove a reputation result for stage games with a strong Stackelberg action: if there is positive probability that player one is a particular type whose commitment payoff is equal to player one’s highest payoff, consistent with the players’ individual rationality, then a patient player one secures this type’s commitment payoff in any Bayes-Nash equilibrium of the repeated game. In contrast, if the type’s commitment payoff is strictly less than player one’s highest payoff consistent with the players’ individual rationality, then the worst perfect Bayesian equilibrium payoff for a patient player one is equal to his minimax payoff. Keywords: Repeated Games, Reputation, Equal Discount Factor, Long-run Play- ers, Imperfect Monitoring, Complicated Types, Finite Automaton JEL Classification Numbers: C73, D83. Ko¸c University, Department of Economics, Rumeli Feneri Yolu, Sarıyer 34450, Istanbul, Turkey. Email: aatakan@ku.edu.tr. MEDS, Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. Email: m-ekmekci@kellogg.northwestern.edu . 1 We would like to thank Martin Cripps, Eddie Dekel, Eduardo Faingold, Johannes Horner, Christoph Kuzmics, and Larry Samuelson for useful discussions. This paper has also benefitted from the comments of seminar participants at Northwestern University, Princeton University, Yale University, University of Pennsylvania, Ko¸c University, Stanford University, Bilkent University. Part of this research was conducted while Mehmet Ekmekci was visiting the Cowles Foundation and Economics Department at Yale University.