A seller can provide an experience good to a buyer. The experience good either works or fails. If it works, it brings a payo of 1 to the buyer; otherwise, it brings a payo of 0. Let there be two types of sellers: a strategic type and a good type. A good-type seller s product always works. A strategic seller s product works with probability 0:5 + e, where e 2 [0;0:5] is the eort exerted by the seller. The cost of eort is e2=2. The seller s type is her own private information. The buyer s prior belief is that the seller has a good type with probability 0:6. Let there be two periods of production, t = 1;2, and the time discount factor is = 0:8. In each period, the seller rst posts a price pt and chooses eort et. After seeing the price pt, the buyer decides whether to buy or not. If she buys, consumption takes place and she learns whether the product works or not. We shall refer to the buyer s belief (by the end of period t) that the seller is a good type as the seller s reputation, denoted by t. With