Endogenous Information Structures
Universitat Pompeu Fabra Department of Economics Working Paper No. 386
16 Pages Posted: 16 Aug 1999
Date Written: April 1999
Many models in the economics literature deal with strategic situations with privately informed agents. In those models the information structure is assumed to be exogenous and common knowledge. We consider whether such models, and the results they produce, are robust with respect the endogenization of the information structure. The results depend on whether information acquisition is secret or private, and on whether the strategic situation involves simultaneous or sequential moves. In particular we find that only when information is secretly acquired and moves are simultaneous, the results are fully robust. When information is acquired secretly but moves are sequential additional equilibria may appear. Instead, private information acquisition may make the equilibrium set smaller.
JEL Classification: D81, D82
Suggested Citation: Suggested Citation