Usage of Reputation for Gaining Strategic Advantage

This paper focuses on strategic transfer of information in a competetive environment. The model describes relationships between two agents who have access to information that is needed by another player and can provide it to them at a certain cost. However, they also have an incentive to transfer only a part of available information in order to benefit from being better informed. The model was solved for a single-period game and then the agents' decision rules were derived for the mutiperiod game. After it, an experiment was programmed and conducted to gather data. Testing the main hypothesis that non-strategic transfer of information helps to acquire higher demand than a competitor resulted into rejection of the main hypothesis. Instead, the difference in prices ended up to be a decisive factor for the participants. The paper is structured as follows. In section 2, the underlying literature is reviewed. In sections 3 and 4 the model is set up and solved. In section 5 the results are analyzed. Section 6 and 7 provide a summary and extra materials respectively.