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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 the indifference curves of two types cross twice, such that the celebrated single-crossing property fails to hold. Equilibrium exhibits a threshold type below which types choose actions that are fully revealing and above which they pool in a pairwise fashion, with a gap separating the actions chosen by these two sets of types. The resulting signaling action is quasi-concave in type. We also provide an algorithm to establish equilibrium existence by construction.

Suggested Citation

  • Chia-Hui Chen & Junichiro Ishida & Wing Suen, 2020. "Signaling under Double-Crossing Preferences," ISER Discussion Paper 1103rr, Institute of Social and Economic Research, Osaka University, revised Oct 2021.
    • Handle: RePEc:dpr:wpaper:1103rr
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    File URL: https://www.iser.osaka-u.ac.jp/library/dp/2020/DP1103RR.pdf
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    References listed on IDEAS

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    Cited by:

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    4. Takaaki Hamada, 2023. "Endogenous timing in tax competition: The effect of asymmetric information," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(3), pages 570-614, June.

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