Coordination and Private Information Revelation

This paper examines a persuasion game between two agents with one-sided asymmetric information, where the informed agent can reveal her private information prior to playing a Battle-of-the-Sexes coordination game. There is a close connection between the extent of information revelation and the possibility of coordination failure; while, in the absence of any coordination failure, there exist equilibria with full disclosure, in the presence of strategic uncertainty in coordination there exists an equilibrium with no information revelation. We provide a purification argument for the non-existence result, as well demonstrate that it is robust to several extensions, including both-sided asymmetric information and imprecise information revelation.

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Coordination and Private Information Revelation: Failure of Information Unraveling

10.20944/preprints201807.0374.v1 ◽

2018 ◽

Author(s):

Debdatta Saha ◽

Prabal Roy Chowdhury

Keyword(s):

Asymmetric Information ◽

Private Information ◽

Mixed Strategy ◽

Coordination Game ◽

Information Revelation ◽

Strategic Uncertainty ◽

Two Agents ◽

Strategy Equilibrium ◽

Battle Of The Sexes ◽

Central Result

This paper examines a persuasion game between two agents with one-sided asymmetric information, where the informed agent can reveal her private information prior to playing a Battle-of-the-Sexes coordination game. We find that in the presence of strategic uncertainty in coordination there exists an equilibrium where there is no 'unraveling' of information. We provide a purification argument for this mixed strategy equilibrium to strengthen the central result, which is robust to several extensions, including both-sided asymmetric information and imprecise information revelation.

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Information Revelation in Procurement Auctions with Two-Sided Asymmetric Information

Journal of Economics & Management Strategy ◽

10.1111/jems.12075 ◽

2014 ◽

Vol 23 (4) ◽

pp. 952-968

Author(s):

Nicola Doni ◽

Domenico Menicucci

Keyword(s):

Asymmetric Information ◽

Procurement Auctions ◽

Information Revelation

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Local Development as A Coordination Game Under Strategic Uncertainty

SSRN Electronic Journal ◽

10.2139/ssrn.251729 ◽

2000 ◽

Author(s):

Fulvio Fontini

Keyword(s):

Local Development ◽

Coordination Game ◽

Strategic Uncertainty

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The Incentive Model in Supply Chain with Trade Credit and Default Risk

Complexity ◽

10.1155/2019/5909785 ◽

2019 ◽

Vol 2019 ◽

pp. 1-11

Author(s):

Hong Cheng ◽

Yingsheng Su ◽

Jinjiang Yan ◽

Xianyu Wang ◽

Mingyang Li

Keyword(s):

Supply Chain ◽

Asymmetric Information ◽

Moral Hazard ◽

Private Information ◽

Default Risk ◽

Trade Credit ◽

Uncertain Demand ◽

Market Demand ◽

Incentive Contract ◽

Risk Neutral

Trade credit is widely used for its advantages. However, trade credit also brings default risk to the manufacturer due to the uncertain demand. And moral hazard may aggravate the default risk. The purpose of this paper is to investigate the role of moral hazard in trade credit and explore incentive contract under uncertain demand and asymmetric information. We consider a two-echelon supply chain consisting of a risk-neutral retailer ordering a single product from a risk-neutral manufacturer. Market demand is stochastic and is influenced by retailer’s sales effort which is his private information. Incentive theory is used to develop the principal-agent model and get the incentive contract from the manufacturer’s perspective. Results show that the retailer will reduce his effort level to get more profit and the manufacturer’s profit will be reduced, in the case of asymmetric information. Facing this result, the manufacturer will reduce the order quantity in incentive contract to lessen his losses. Numerical examples are provided to illustrate all these theoretical results and to draw managerial insights.

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Strategic Interaction and Interstate Crises: A Bayesian Quantal Response Estimator for Incomplete Information Games

Political Analysis ◽

10.1093/pan/mpm037 ◽

2008 ◽

Vol 16 (3) ◽

pp. 250-273 ◽

Cited By ~ 8

Author(s):

Justin Esarey ◽

Bumba Mukherjee ◽

Will H. Moore

Keyword(s):

Asymmetric Information ◽

Incomplete Information ◽

Learning Process ◽

Private Information ◽

Statistical Treatment ◽

Quantal Response ◽

Crisis Bargaining ◽

Incomplete Information Games ◽

Information Characteristics ◽

Information Games

Private information characteristics like resolve and audience costs are powerful influences over strategic international behavior, especially crisis bargaining. As a consequence, states face asymmetric information when interacting with one another and will presumably try to learn about each others' private characteristics by observing each others' behavior. A satisfying statistical treatment would account for the existence of asymmetric information and model the learning process. This study develops a formal and statistical framework for incomplete information games that we term the Bayesian Quantal Response Equilibrium Model (BQRE model). Our BQRE model offers three advantages over existing work: it directly incorporates asymmetric information into the statistical model's structure, estimates the influence of private information characteristics on behavior, and mimics the temporal learning process that we believe takes place in international politics.

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Abstention in Elections with Asymmetric Information and Diverse Preferences

American Political Science Review ◽

10.2307/2585402 ◽

1999 ◽

Vol 93 (2) ◽

pp. 381-398 ◽

Cited By ~ 149

Author(s):

Timothy J. Feddersen ◽

Wolfgang Pesendorfer

Keyword(s):

Asymmetric Information ◽

Private Information ◽

Positive Fraction ◽

Biased Distribution

We analyze a model of a two-candidate election with costless voting in which voters have asymmetric information and diverse preferences. We demonstrate that a strictly positive fraction of the electorate will abstain and that, nevertheless, elections effectively aggregate voters' private information. Using examples, we show that more informed voters are more likely to vote than their less informed counterparts. Increasing the fraction of the electorate that is informed, however, may lead to higher levels of abstention. We conclude by showing that a biased distribution of information can lead to a biased voting population but does not lead to biased outcomes.

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A Patent System with a Contingent Delegation Fee under Asymmetric Information

The B E Journal of Economic Analysis & Policy ◽

10.1515/1935-1682.2702 ◽

2012 ◽

Vol 12 (1) ◽

Author(s):

Weonseek Kim ◽

Bonwoo Koo

Keyword(s):

Asymmetric Information ◽

Objective Function ◽

Private Information ◽

Lower Cost ◽

Innovation Process ◽

Patent System ◽

Patent Office ◽

Second Stage ◽

Contingent Fee ◽

Control Loss

Abstract Under the framework of a two-stage innovation process in which the first-stage innovation is commercialized by multiple firms at the second stage, this study proposes an optimal patent system for efficient commercialization by a lower cost firm when the R&D costs are private information. Under the existing patent system of granting patents sequentially to successful innovators, the commercialization can be achieved by an inefficient firm (called control loss) and duplicative R&D efforts may occur through competitive innovation race. This study shows that the problems of control loss and duplicative R&D efforts can be prevented if the patent office grants a patent with a mandatory contingent delegation fee only to the first innovator. A carefully designed contingent fee function can induce the first innovator to internalize the patent office’s objective function, leading to efficient commercialization by a lower cost firm.

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Information mirages and financial contagion in an asset market experiment

Journal of Economic Studies ◽

10.1108/jes-08-2015-0147 ◽

2015 ◽

Vol 42 (6) ◽

pp. 1029-1055 ◽

Cited By ~ 8

Author(s):

Charles Noussair ◽

Yilong Xu

Keyword(s):

Asymmetric Information ◽

Private Information ◽

Relevant Information ◽

The Other ◽

Asset Markets ◽

Financial Contagion ◽

Systematic Effect ◽

Inside Information ◽

True Nature ◽

Content Type

Purpose – The purpose of this paper is to consider whether asymmetric information about correlations between assets can induce financial contagion. Contagion, unjustified by fundamentals, would arise if participants react in one market to uninformative trades in the other market that actually convey no relevant information. The authors also consider whether the market accurately disseminates insider information about fundamental value correlations when such information is indeed present. Design/methodology/approach – The authors employ experimental asset markets to answer the research questions. The experimental markets allow participants to simultaneously trade two assets for multiple rounds. In each round, a shock occurs, which either have an idiosyncratic effect on the shocked asset, or a systematic effect on both assets. Half of the time, there exist insiders who know the true nature of the shock and how it affects the value of the other asset. The other half of the time, no agent knows whether there is a correlation between the assets. In such cases, there is the potential for the appearance of information mirages. Uninformed traders, in either condition, do not know whether or not there exist insiders, but can try to infer this from the market activity they observe. Findings – The results of the experiment show that when inside information about the nature of the correlation between assets does exist, it is readily disseminated in the form of market prices. However, when there is no private information (PI), mirages are common, demonstrating that financial contagion can arise in the absence of any fundamental relationship between assets. An analysis of individual behavior suggests that some unprofitable decisions appear to be related to an aversion to complex distributions of lottery payoffs. Originality/value – The study focusses on one of the triggers of unjustified financial contagion, namely, asymmetric information. The authors have studied financial contagion in a controlled experimental setting where the authors can carefully control information, and specify the fundamental interdependence between assets traded in different markets.

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