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Information sharing networks in linear quadratic games

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  • Sergio Currarini

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  • Francesco Feri

Abstract

We study the bilateral exchange of information in the context of linear quadratic games. An information structure is here represented by a non directed network, whose nodes are agents and whose links represent sharing agreements. We first study the equilibrium use of information given the network, finding that the extent to which a piece of information is observed by others affects the equilibrium use of it, in line with previous results in the literature. We then study the incentives to share information ex-ante, highlighting the role of the elasticity of payoffs to the equilibrium volatility of one’s own strategy and of opponents’ strategies. For the case of uncorrelated signals we fully characterise pairwise stable networks for the general linear quadratic game. For the case of correlated signals, we study pairwise stable networks for three specific linear quadratic games—Cournot Oligopoly, Keynes’ Beauty Contest and a Public Good Game—in which strategies are substitute, complement and orthogonal, respectively. We show that signals’ correlation favours the transmission of information, but may also prevent all information from being transmitted. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Sergio Currarini & Francesco Feri, 2015. "Information sharing networks in linear quadratic games," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(3), pages 701-732, August.
  • Handle: RePEc:spr:jogath:v:44:y:2015:i:3:p:701-732
    DOI: 10.1007/s00182-014-0450-x
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    References listed on IDEAS

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    7. Amir Ziv, 1993. "Information Sharing in Oligopoly: The Truth-Telling Problem," RAND Journal of Economics, The RAND Corporation, vol. 24(3), pages 455-465, Autumn.
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    Cited by:

    1. Sergio Currarini & Marco A. Marini, 2015. "Coalitional Approaches to Collusive Agreements in Oligopoly Games," Manchester School, University of Manchester, vol. 83(3), pages 253-287, June.
    2. Ushchev, Philip & Zenou, Yves, 2015. "Price Competition in Product Variety Networks," CEPR Discussion Papers 10862, C.E.P.R. Discussion Papers.
    3. repec:eee:gamebe:v:110:y:2018:i:c:p:226-247 is not listed on IDEAS
    4. Chen, Ying-Ju & Zenou, Yves & Zhou, Junjie, 2015. "Competitive pricing strategies in social networks," CEPR Discussion Papers 10857, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Information sharing; Networks; Bayesian equilibrium; Beauty Contest; Oligopoly; D43; D82; D85; L13;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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