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I study how the ability to erase records affects patient players’ returns from building reputations.
In my model, a patient seller interacts with a sequence of myopic consumers. The seller is either
an honest type who always exerts effort and never erases any records, or an opportunistic type who may
shirk and can also erase his past actions at a low cost. I show that the seller has an incentive to exert effort
until he has a long enough good record, after which his continuation value exceeds his commitment payoff.
However, once the seller is sufficiently long-lived, his equilibrium payoff must be close to his minmax value.
