On Signalling and Screening in Markets with Asymmetric Information

Anastasios Dosis ()
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Anastasios Dosis: THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique, ESSEC Business School

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Abstract: The two games that are typically used to model markets with asymmetric information are the signalling game and the screening game. In the signalling game, an equilibrium may not be efficient because of the arbitrariness of off-the-equilibrium-path beliefs. In the screening game, a pure-strategy Nash equilibrium may fail to exist because of " cream-skimming " deviations. Perhaps surprisingly, I show how equilibrium generically exists and is efficient in a game that combines signalling and screening. The signalling part assures the existence of equilibrium, whereas the screening part prevents non-efficient allocations from being supported as equilibrium allocations .

Keywords: Signalling; screening; asymmetric information; information economics; existence; efficiency (search for similar items in EconPapers)
Date: 2016-03-02
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-mic
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