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Signaling in a Search Market

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  • Inderst, Roman

    (Sonderforschungsbereich 504)

Abstract

We consider a game of signaling where the informed sender proposes a contract, which can only be accepted or rejected by the receiver. While most of the literature considers a bilaterally monopolistic setting, we embed the game in a search market environment where a sender may switch to another receiver in case of rejection. We show that the set of contracts which may be implemented in an equilibrium converges to the set of least-cost separating contracts as frictions disappear.

Suggested Citation

  • Inderst, Roman, 1998. "Signaling in a Search Market," Sonderforschungsbereich 504 Publications 98-50, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  • Handle: RePEc:xrs:sfbmaa:98-50
    Note: Financial Support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged. I thank Thomas Troeger for substantial help.
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