Strategic Evidence Disclosure in Networks and Equilibrium Discrimination

37 Pages Posted: 27 Dec 2022 Last revised: 3 May 2023

See all articles by Leonie Baumann

Leonie Baumann

McGill University - Department of Economics

Rohan Dutta

McGill University

Date Written: December 16, 2022

Abstract

A group of agents with ex-ante independent and identically uncertain quality compete for a prize, awarded by a principal. Agents may possess evidence about the quality of those they share a social connection with (neighbours), and themselves. In one equilibrium, adversarial disclosure of evidence leads the principal to statistically discriminate between agents based on their number of neighbours (degree). We identify parameter values for which an agent’s ex-ante winning probability is monotone in degree. All equilibria that satisfy some robustness criteria lie between this adverse disclosure equilibrium and a less informative one that features no snitching and no discrimination.

Keywords: equilibrium discrimination, disclosure, networks

JEL Classification: C72, D83, D85, L14, J71, Z13

Suggested Citation

Baumann, Leonie and Dutta, Rohan, Strategic Evidence Disclosure in Networks and Equilibrium Discrimination (December 16, 2022). Available at SSRN: https://ssrn.com/abstract=4305083 or http://dx.doi.org/10.2139/ssrn.4305083

Leonie Baumann (Contact Author)

McGill University - Department of Economics ( email )

855 Sherbrooke Street West
Montreal, QC H3A 2T7
CANADA

Rohan Dutta

McGill University ( email )

855 Sherbrooke Street West
Montreal, QC H3A 2T7
CANADA

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