When are Signals Complements or Substitutes

Tilman Börgers (), Angel Hernanco-Veciana and Daniel Krohmer

No 1488, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

Abstract: The paper introduces a notion of complementarity (substitutability) of two signals which requires that in all decision problems each signal becomes more (less) valuable when the other signal becomes available. We provide a general characterization which relates complementarity and substitutability to a Blackwell comparison of two auxiliary signals. In a setting with a binary state space and binary signals, we find an explicit characterization that permits an intuitive interpretation of complementarity and substitutability. We demonstrate how these conditions extend to more general settings.

Keywords: Complementarity; substitutability; value of information; Blackwell ordering. (search for similar items in EconPapers)
JEL-codes: C00 C44 D81 D83 (search for similar items in EconPapers)
Date: 2010-04-11
New Economics Papers: this item is included in nep-cta
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Related works:
Journal Article: When are signals complements or substitutes? (2013)
Working Paper: When are Signals Complements or Substitutes? (2010)
Working Paper: When are signals complements or substitutes? (2007)
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