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Asymmetric Information Acquisition and Behavior in Role Choice Models: An Endogenously Generated Signaling Game

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  • Daughety, Andrew F
  • Reinganum, Jennifer F

Abstract

The authors employ a static homogeneous-good duopoly model wherein firms can choose to produce in one of two periods. The model allows agents to acquire information and then traces the impact of the information pattern on subsequent production behavior. Asymmetric information acquisition leads to a unique production role choice pattern: the informed (uninformed) firm chooses to assume the leader's (follower's) role. Moreover, if information is costly, the typical equilibrium involves only one firm acquiring information. Thus, identical firms with identical opportunities choose to become asymmetrically informed and produce sequentially: this is the unique (refined) equilibrium outcome. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Daughety, Andrew F & Reinganum, Jennifer F, 1994. "Asymmetric Information Acquisition and Behavior in Role Choice Models: An Endogenously Generated Signaling Game," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(4), pages 795-819, November.
  • Handle: RePEc:ier:iecrev:v:35:y:1994:i:4:p:795-819
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    Cited by:

    1. Amir, Rabah & Stepanova, Anna, 2006. "Second-mover advantage and price leadership in Bertrand duopoly," Games and Economic Behavior, Elsevier, vol. 55(1), pages 1-20, April.
    2. Ivan Stoykov & Paraskeva Dimitrova, 2003. "Modelling Firm Activity," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 3-24.
    3. Güth, Sandra & Güth, Werner & Müller, Wieland, 2000. "Private information, risk aversion, and the evolution of market research," SFB 373 Discussion Papers 2000,113, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    4. Janssen, M.C.W. & Maasland, E., 1997. "On the Unique D1 Equilibrium in the Stackelberg Model with Asymmetric Information," Discussion Paper 1997-106, Tilburg University, Center for Economic Research.
    5. Esther Hauk & Sjaak Hurkens, 2001. "Secret information acquisition in Cournot markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(3), pages 661-681.
    6. Marcel Boyer & Michel Moreaux, 1995. "Capacity Commitment Versus Flexibility: The Technological Choice Nexus in a Strategic Context," CIRANO Working Papers 95s-35, CIRANO.
    7. Cooper, David J., 1997. "Barometric price leadership," International Journal of Industrial Organization, Elsevier, vol. 15(3), pages 301-325, May.
    8. Silvana Krasteva & Huseyin Yildirim, 2011. "Payoff Uncertainty, Bargaining Power, and the Strategic Sequencing of Bilateral Negotiations," Levine's Working Paper Archive 786969000000000208, David K. Levine.
    9. John G. Riley, 2001. "Silver Signals: Twenty-Five Years of Screening and Signaling," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 432-478, June.
    10. Hans-Theo Normann, 1997. "Endogenous Stackelberg equilibria with incomplete information," Journal of Economics, Springer, vol. 66(2), pages 177-187, June.
    11. Orlando I. Balboa & Andrew F. Daughety & Jennifer F. Reinganum, 2004. "Market Structure and the Demand for Free Trade," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(1), pages 125-150, March.
    12. Chrysostomos Tabakis & Maurizio Zanardi, 2017. "Antidumping Echoing," Economic Inquiry, Western Economic Association International, vol. 55(2), pages 655-681, April.
    13. Pacheco de Almeida, Goncalo & Zemsky, Peter, 2002. "Time-to-Build and Strategic Investment Under Uncertainty," CEPR Discussion Papers 3674, C.E.P.R. Discussion Papers.
    14. Krishnan S. Anand & Manu Goyal, 2009. "Strategic Information Management Under Leakage in a Supply Chain," Management Science, INFORMS, vol. 55(3), pages 438-452, March.

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