Dynamic Deception

Axel Anderson and Lones Smith

American Economic Review, 2013, vol. 103, issue 7, 2811-47

Abstract: We characterize the unique equilibrium of a competitive continuous time game between a resource-constrained informed player and a sequence of rivals who partially observe his action intensity. Our game adds noisy monitoring and impatient players to Aumann and Maschler (1966), and also subsumes insider trading models. The intensity bound induces a novel strategic bias and serial mean reversion by uninformed players. We compute the duration of the informed player's informational edge. The uninformed player's value of information is concave if the intensity bound is large enough. Costly obfuscation by the informed player optimally rises in the public deception.

JEL-codes: D82 D83 G14 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.7.2811
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Citations: View citations in EconPapers (2)

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