Signaling Under Double‐Crossing Preferences

Chia‐Hui Chen, Junichiro Ishida and Wing Suen

Econometrica, 2022, vol. 90, issue 3, 1225-1260

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.

Date: 2022
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https://doi.org/10.3982/ECTA19210

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Working Paper: Signaling under Double-Crossing Preferences (2021)
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