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Quid pro quo: friendly information exchange between rivals

Author

Listed:
  • Blume, Andreas

    (Department of Economics, University of Arizona)

  • Park, In-Uck

    (School of Economics, University of Bristol)

Abstract

We show that information exchange via disclosure is possible in equilibrium even when it is certain that whenever one party learns the truth, the other loses. The incentive to disclose results either from an expectation of disclosure being reciprocated -- the quid pro quo motive -- or from the possibility of learning from the rival's failure to act in response to a disclosure -- the screening motive. Alternating and gradual disclosures are generally indispensable for information exchange and the number of disclosure rounds grows without bound if the agents' initial information becomes sufficiently diffuse -- in that sense, the less informed agents are the more they talk. Patient individuals can achieve efficiency by means of continuous alternating disclosures of limited amounts of information. This provides a rationale for protracted dialogues.

Suggested Citation

  • Blume, Andreas & Park, In-Uck, 2022. "Quid pro quo: friendly information exchange between rivals," Theoretical Economics, Econometric Society, vol. 17(3), July.
  • Handle: RePEc:the:publsh:4643
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    References listed on IDEAS

    as
    1. Forges, Francoise M, 1986. "An Approach to Communication Equilibria," Econometrica, Econometric Society, vol. 54(6), pages 1375-1385, November.
    2. Morgan, John & Stocken, Phillip C, 2003. "An Analysis of Stock Recommendations," RAND Journal of Economics, The RAND Corporation, vol. 34(1), pages 183-203, Spring.
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    More about this item

    Keywords

    Alternating information disclosure; dynamic communication; two-sided incomplete information;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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