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quality goods are able to use prices as a signaling device and this enables them to trade. However, not all sellers of high …
Persistent link: https://www.econbiz.de/10012733476
This paper studies how the arrival of information affects welfare in a general equilibrium exchange economy with … incomplete and differential information. It considers a setup in which agents differ in their attitudes toward risk. This … introduces gains from trade. In equilibrium, the information sets differ across agents, i.e., they hold heterogeneous beliefs …
Persistent link: https://www.econbiz.de/10013096983
commitment and its preferences being private information; and that a successful mechanism must handle both of the problems. With … commitment to peg is strengthened. That the insurance scheme serves as a commitment device renders it an ineffective signaling … device: in the game where the government's type is private information, a separating equilibrium does not, in general, exist …
Persistent link: https://www.econbiz.de/10013291933
and commodities. By reinterpreting the variables, our model encompasses a broad range of adverse selection and signalling …
Persistent link: https://www.econbiz.de/10014128751
Firms invest significantly in advertising with the intent of influencing consumers favorably towards their goods. Along with advertising, word of mouth also plays an important role in shaping consumer opinion about a firm's goods. In many contexts, word of mouth is affected by behaviors such as...
Persistent link: https://www.econbiz.de/10014039391
and commodities. By reinterpreting the variables, our model encompasses a broad range of adverse selection and signalling …
Persistent link: https://www.econbiz.de/10014074211
We analyze contingency fees in the Reinganum and Wilde (1986) signaling model of litigation. The effect of contingency …, unambiguously increases the incidence of trial in both variations of the signaling model. The interaction of fee shifting with …
Persistent link: https://www.econbiz.de/10014127695
asymmetry. In this paper I show that if there is a signaling technology which is sufficiently strong (i.e., the marginal cost of … signaling declines sufficiently rapidly with quality) the cost of sorting is low and a Nash equilibrium exists. Empirically … constraints are added to a signaling model there is a minimum signaling threshold. Finally I argue that these conclusions hold …
Persistent link: https://www.econbiz.de/10014114161
flows and reduces their required risk premia. The logic is that more information leads necessarily to more certainty, and … logic shows that the best available information can often leave decision makers less certain about future events. And for … those cases where information indeed brings great certainty, conventional mean-variance asset pricing models imply that more …
Persistent link: https://www.econbiz.de/10013033047
A lift zonoid criterion is proven to be necessary and sufficient for ranking signals in multi-task agency models, and can be applied to a broader set of signals than a multivariate MPS criterion. The two criteria coincide under certain conditions
Persistent link: https://www.econbiz.de/10013123302