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Signaling Under Double‐Crossing Preferences
Author(s) -
Chen ChiaHui,
Ishida Junichiro,
Suen Wing
Publication year - 2022
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta19210
Subject(s) - pairwise comparison , type (biology) , mathematics , property (philosophy) , mathematical economics , level crossing , action (physics) , computer science , statistics , physics , engineering , mechanical engineering , ecology , philosophy , epistemology , quantum mechanics , biology
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.