We formulate a dynamic learning-and-adjustment model of a market in which sellers choose signals that potentially reveal their types. If the dynamic process selects a unique limiting outcome, then that outcome must be an undefeated equilibrium; though to be undefeated does not suffice to be the sole limiting outcome. If a Riley outcome exists that provides "high" type sellers with a higher utility than any other equilibrium outcome, then that outcome is the unique limiting outcome of our model. In the absence of a Riley outcome, or if high type workers obtain higher utility in a pooling equilibrium than in the Riley outcome, a unique limit outcome will only emerge under very stringent conditions. If these conditions fail, the market will cycle between various equilibria and, possibly, nonequilibrium outcomes
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Paper provided by University of Bonn, Germany in its series Discussion Paper Serie B with number
271.
Length: pages Date of creation: 1994 Date of revision: Handle: RePEc:bon:bonsfb:271
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Find related papers by JEL classification: C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Ehud Kalai & Ehud Lehrer, 1991.
"Private-Beliefs Equilibrium,"
Discussion Papers
926, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Other versions:
Kalai, Ehud & Lehrer, Ehud, 1991.
"Private-Beliefs Equilibrium,"
Working Papers
91-19, C.V. Starr Center for Applied Economics, New York University.
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