Asymmetric Information Acquisition and Behavior in Role Choice Models: An Endogenously Generated Signaling Game

Andrew Daughety and Jennifer Reinganum ()

International Economic Review, 1994, vol. 35, issue 4, 795-819

Abstract: The authors employ a static homogeneous-good duopoly model wherein firms can choose to produce in one of two periods. The model allows agents to acquire information and then traces the impact of the information pattern on subsequent production behavior. Asymmetric information acquisition leads to a unique production role choice pattern: the informed (uninformed) firm chooses to assume the leader's (follower's) role. Moreover, if information is costly, the typical equilibrium involves only one firm acquiring information. Thus, identical firms with identical opportunities choose to become asymmetrically informed and produce sequentially: this is the unique (refined) equilibrium outcome. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1994
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