Separating Signaling Equilibria Under Random Relations between Costs and Attributes: Discrete Attributes

14 Pages Posted: 18 Jan 2004

See all articles by David Feldman

David Feldman

Banking and Finance, UNSW Business School, UNSW Sydney; Financial Research Network (FIRN)

Multiple version iconThere are 2 versions of this paper

Date Written: December 12, 2003

Abstract

We identify conditions for separating signaling equilibria where discrete attributes are randomly related to a continuum of costs. A necessary condition is the ordering of the cost distributions conditional on attributes by first order stochastic dominance. A necessary and sufficient condition is the ordering of the cost distributions conditional on attributes by the monotone likelihood ratio property. An equivalent necessary and sufficient condition is the monotone ordering of the cost elasticities of these distributions.

Keywords: Equilibrium, Signaling, Asymmetric Information, Monotone Likelihood Ratio

JEL Classification: D82

Suggested Citation

Feldman, David, Separating Signaling Equilibria Under Random Relations between Costs and Attributes: Discrete Attributes (December 12, 2003). Available at SSRN: https://ssrn.com/abstract=486563 or http://dx.doi.org/10.2139/ssrn.486563

David Feldman (Contact Author)

Banking and Finance, UNSW Business School, UNSW Sydney ( email )

UNSW Sydney, NSW 2052
Australia
+61 2 9385 5748 (Phone)
+61 2 9385 6347 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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