A Note on Multiple Equilibria and Punitive Damages Rules in 'Everybody Out of the Pool'
Posted: 20 Sep 1998
Abstract
This article describes two types of revealing equilibria in the presence of punitive damages meant to encourage truthful revelation of the safety of a product. Full information price (FIP) revealing equilibria occur when the equilibrium prices are those that would obtain under full information. Full information quantity (FIQ) revealing equilibria occur when the equilibrium quantities are those that would obtain under full information. We discuss the punitive damages policies which support each type of equilibrium and argue that FIP revealing equilibria are likely to be of greater interest.
JEL Classification: L41
Suggested Citation: Suggested Citation
Daughety, Andrew F. and Reinganum, Jennifer F., A Note on Multiple Equilibria and Punitive Damages Rules in 'Everybody Out of the Pool'. Available at SSRN: https://ssrn.com/abstract=129168
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