IDEAS home Printed from https://ideas.repec.org/a/eee/gamebe/v129y2021icp238-269.html
   My bibliography  Save this article

A model of gradual information disclosure

Author

Listed:
  • Xu, Haibo

Abstract

We study a dynamic game in which a financial expert seeks to optimize the utilization of her private information either by information disclosure to an investor or by self-use. The investor may be aligned or biased: an aligned investor always cooperates with the expert, whereas a biased investor may strategically betray the expert. We characterize the joint dynamics of the expert's information disclosure and the investor's type revelation and show that, by disclosing her information gradually, the expert can alleviate the hold-up effect exerted by the biased investor. Moreover, we show that the equilibrium of this game is unique. We also examine how the expert can further increase the value of her information by committing to a deadline or by committing to a particular schedule of information disclosure.

Suggested Citation

  • Xu, Haibo, 2021. "A model of gradual information disclosure," Games and Economic Behavior, Elsevier, vol. 129(C), pages 238-269.
    • Handle: RePEc:eee:gamebe:v:129:y:2021:i:c:p:238-269
    DOI: 10.1016/j.geb.2021.06.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0899825621000774
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.geb.2021.06.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dilip Abreu & Faruk Gul, 2000. "Bargaining and Reputation," Econometrica, Econometric Society, vol. 68(1), pages 85-118, January.
    2. Leslie M. Marx & Steven A. Matthews, 2000. "Dynamic Voluntary Contribution to a Public Project," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(2), pages 327-358.
    3. Watson, Joel, 2002. "Starting Small and Commitment," Games and Economic Behavior, Elsevier, vol. 38(1), pages 176-199, January.
    4. Ben Lockwood & Jonathan P. Thomas, 2002. "Gradualism and Irreversibility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(2), pages 339-356.
    5. Anton, James J & Yao, Dennis A, 1994. "Expropriation and Inventions: Appropriable Rents in the Absence of Property Rights," American Economic Review, American Economic Association, vol. 84(1), pages 190-209, March.
    6. Drew Fudenberg & David K. Levine, 2008. "Reputation And Equilibrium Selection In Games With A Patient Player," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 7, pages 123-142, World Scientific Publishing Co. Pte. Ltd..
    7. James J. Anton & Dennis A. Yao, 2002. "The Sale of Ideas: Strategic Disclosure, Property Rights, and Contracting," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(3), pages 513-531.
    8. Johannes Hörner & Andrzej Skrzypacz, 2016. "Selling Information," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1515-1562.
    9. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    10. Drew Fudenberg & David K. Levine, 2008. "Maintaining a Reputation when Strategies are Imperfectly Observed," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 8, pages 143-161, World Scientific Publishing Co. Pte. Ltd..
    11. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626, National Bureau of Economic Research, Inc.
    12. Sandeep Baliga & Jeffrey C. Ely, 2016. "Torture and the Commitment Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(4), pages 1406-1439.
    13. Anat R. Admati & Motty Perry, 1991. "Joint Projects without Commitment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 259-276.
    14. Gale, Douglas, 2001. "Monotone Games with Positive Spillovers," Games and Economic Behavior, Elsevier, vol. 37(2), pages 295-320, November.
    15. , & , & ,, 2012. "Optimal deadlines for agreements," Theoretical Economics, Econometric Society, vol. 7(2), May.
    16. Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, vol. 27(2), pages 280-312, August.
    17. Olivier Compte & Philippe Jehiel, 2004. "Gradualism in Bargaining and Contribution Games," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(4), pages 975-1000.
    18. Watson, Joel, 1999. "Starting Small and Renegotiation," Journal of Economic Theory, Elsevier, vol. 85(1), pages 52-90, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wioletta Dziuda & Ronen Gradwohl, 2015. "Achieving Cooperation under Privacy Concerns," American Economic Journal: Microeconomics, American Economic Association, vol. 7(3), pages 142-173, August.
    2. Caruana, Guillermo & Einav, Liran & Quint, Daniel, 2007. "Multilateral bargaining with concession costs," Journal of Economic Theory, Elsevier, vol. 132(1), pages 147-166, January.
    3. Furusawa, Taiji & Kawakami, Toshikazu, 2008. "Gradual cooperation in the existence of outside options," Journal of Economic Behavior & Organization, Elsevier, vol. 68(2), pages 378-389, November.
    4. Maoliang Ye & Jie Zheng & Plamen Nikolov & Sam Asher, 2020. "One Step at a Time: Does Gradualism Build Coordination?," Management Science, INFORMS, vol. 66(1), pages 113-129, January.
    5. Levy, Gilat & Razin, Ronny, 2013. "Dynamic legislative decision making when interest groups control the agenda," Journal of Economic Theory, Elsevier, vol. 148(5), pages 1862-1890.
    6. Guéron, Yves, 2015. "Failure of gradualism under imperfect monitoring," Journal of Economic Theory, Elsevier, vol. 157(C), pages 128-145.
    7. Tan, Jonathan H.W. & Breitmoser, Yves & Bolle, Friedel, 2015. "Voluntary contributions by consent or dissent," Games and Economic Behavior, Elsevier, vol. 92(C), pages 106-121.
    8. Wolitzky, Alexander, 2011. "Indeterminacy of reputation effects in repeated games with contracts," Games and Economic Behavior, Elsevier, vol. 73(2), pages 595-607.
    9. Ekmekci, Mehmet & Gossner, Olivier & Wilson, Andrea, 2012. "Impermanent types and permanent reputations," Journal of Economic Theory, Elsevier, vol. 147(1), pages 162-178.
    10. Matros, Alexander & Smirnov, Vladimir, 2016. "Duplicative search," Games and Economic Behavior, Elsevier, vol. 99(C), pages 1-22.
    11. Aghamolla, Cyrus & Hashimoto, Tadashi, 2020. "Information arrival, delay, and clustering in financial markets with dynamic freeriding," Journal of Financial Economics, Elsevier, vol. 138(1), pages 27-52.
    12. Kartal, Melis & Müller, Wieland & Tremewan, James, 2021. "Building trust: The costs and benefits of gradualism," Games and Economic Behavior, Elsevier, vol. 130(C), pages 258-275.
    13. Dilip Abreu & David G. Pearce, 2006. "Reputational Wars of Attrition with Complex Bargaining Postures," Levine's Working Paper Archive 122247000000001218, David K. Levine.
    14. Harasser, Andreas, 2014. "Information asymmetry and reentry," Economics Letters, Elsevier, vol. 123(2), pages 118-121.
    15. Alp E. Atakan & Mehmet Ekmekci, 2012. "Reputation in Long-Run Relationships," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(2), pages 451-480.
    16. Luís Cabral & Ali Hortacsu, 2004. "The Dynamics of Seller Reputation: Theory and Evidence from eBay," Working Papers 04-05, New York University, Leonard N. Stern School of Business, Department of Economics.
    17. Ely, Jeffrey & Fudenberg, Drew & Levine, David K., 2008. "When is reputation bad?," Games and Economic Behavior, Elsevier, vol. 63(2), pages 498-526, July.
    18. Susan Athey & Kyle Bagwell, 2008. "Collusion With Persistent Cost Shocks," Econometrica, Econometric Society, vol. 76(3), pages 493-540, May.
    19. Mailath, George J. & Samuelson, Larry, 2015. "Reputations in Repeated Games," Handbook of Game Theory with Economic Applications,, Elsevier.
    20. D. Abreu & D. Pearce, 2000. "Bargaining, Reputation and Equilibrium Selection in Repeated Games," Princeton Economic Theory Papers 00f2, Economics Department, Princeton University.

    More about this item

    Keywords

    Private information; Information disclosure; Hold-up effect; Gradualism; Commitment;
    All these keywords.

    JEL classification:

    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:gamebe:v:129:y:2021:i:c:p:238-269. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.