Strategic information transmission
Vincent P. Crawford,Joel Sobel +1 more
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In this article, the authors developed a model of strategic communication in which a better-informed Sender (S) sends a possibly noisy signal to a Receiver (R), who then takes an action that determines the welfare of both.Abstract:
This paper develops a model of strategic communication, in which a better-informed Sender (S) sends a possibly noisy signal to a Receiver (R), who then takes an action that determines the welfare of both. We characterize the set of Bayesian Nash equilibria under standard assumptions, and show that equilibrium signaling always takes a strikingly simple form, in which S partitions the support of the (scalar) variable that represents his private information and introduces noise into his signal by reporting, in effect, only which element of the partition his observation actually lies in. We show under further assumptions that before S observes his private information, the equilibrium whose partition has the greatest number of elements is Pareto-superior to all other equilibria, and that if agents coordinate on this equilibrium, R's equilibrium expected utility rises when agents' preferences become more similar. Since R bases his choice of action on rational expectations, this establishes a sense in which equilibrium signaling is more informative when agents' preferences are more similar.read more
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References
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Journal ArticleDOI
Job Market Signaling
TL;DR: In this paper, the authors present a model in which signaling is implicitly defined and explains its usefulness, in which the employer is not sure of the productive capabilities of an individual at the time he/she hires him.
Book
The Strategy of Conflict
TL;DR: In this paper, the authors propose a theory of interdependent decision based on the Retarded Science of International Strategy (RSIS) for non-cooperative games and a solution concept for "noncooperative" games.
Journal ArticleDOI
Reputation and imperfect information
David M. Kreps,Robert Wilson +1 more
TL;DR: The authors reexamine Selten's model, adding to it a small amount of imperfect (or incomplete) information about players' payoffs, and find that this addition is sufficient to give rise to the reputation effect that one intuitively expects.
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Predation, reputation, and entry deterrence☆
Paul Milgrom,John Roberts +1 more
TL;DR: In this paper, a gametheoretic, equilibrium analysis suggests that if a firm is threatened by several potential entrants, then predation may be rational against early entrants, even if it is costly when viewed in isolation, because it yields a reputation which deters other entrants.
Journal ArticleDOI
Games with Incomplete Information Played by “Bayesian” Players Part II. Bayesian Equilibrium Points
TL;DR: In this article, it has been shown that any game with incomplete information is equivalent to a game with complete information, called the "Bayes-equivalent" of the original game or briefly a "Bayesian game".