When the short-term defection payoff dominates the long-run reputational value, agents will defect despite reputational concerns.

Certain conditions must hold if reputation effects are to underwrite commitment. A person’s reputation can have a standing value across a range of games she plays, but in that case her concern for its value should be factored into payoffs in specifying each specific game into which she enters. Reputation can be built up through play of a game only in a case of a repeated game. Then the value of the reputation must be greater to its cultivator than the value to her of sacrificing it in any partic