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Signaling under Double-Crossing Preferences

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  • Chia-Hui Chen
  • Junichiro Ishida
  • Wing Suen

Abstract

This paper provides a general analysis of signaling under double-crossing preferences with a continuum of types. There are natural economic environments where indifference curves of two types cross twice, so that the celebrated single-crossing property fails to hold. Equilibrium exhibits a particular form of pooling: there is a threshold type below which types choose actions that are fully revealing and above which they choose actions that are clustered in possibly non-monotonic ways, with a gap separating these two sets of types. We also provide an algorithm to establish equilibrium existence by construction under mild conditions.

Suggested Citation

  • Chia-Hui Chen & Junichiro Ishida & Wing Suen, 2020. "Signaling under Double-Crossing Preferences," ISER Discussion Paper 1103r, Institute of Social and Economic Research, The University of Osaka, revised Dec 2020.
    • Handle: RePEc:dpr:wpaper:1103r
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    References listed on IDEAS

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    Cited by:

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    3. Chia-Hui Chen & Junichiro Ishida & Wing Suen, 2021. "Reputation Concerns in Risky Experimentation [Reputation and Survival: Learning in a Dynamic Signalling Model]," Journal of the European Economic Association, European Economic Association, vol. 19(4), pages 1981-2021.

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