Separating Signaling Equilibria under Random Relations Between Costs and Attributes: Continuum of Attributes

16 Pages Posted: 20 Jan 2004  

David Feldman

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

Russell S. Winer

New York University (NYU) - Department of Marketing

Multiple version iconThere are 2 versions of this paper

Date Written: December 12, 2004

Abstract

We identify conditions for separating signaling equilibria where costs and attributes are randomly related and where both take a continuum of values. A necessary and sufficient condition is the ordering by the cost elasticities of the cost density functions with respect to the original probability measure and with respect to a probability measure modified by the attribute payoff function. This condition is the equivalent, under the continuum of attributes, to the condition, under discrete attributes, of ordering by the Monotone Likelihood Ratio Property (MLRP) that Feldman (2003) found in a companion paper. We, thus, introduce the concept of Generalized MLRP (GMLRP). While the original MLRP ranks only posterior distributions induced by particular realizations, the GMLRP ranks posterior distributions induced by distributions as well.

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

JEL Classification: D82

Suggested Citation

Feldman, David and Winer, Russell S., Separating Signaling Equilibria under Random Relations Between Costs and Attributes: Continuum of Attributes (December 12, 2004). Available at SSRN: https://ssrn.com/abstract=487262 or http://dx.doi.org/10.2139/ssrn.487262

David Feldman (Contact Author)

Banking and Finance, UNSW Business School, UNSW Australia ( 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

Russell S. Winer

New York University (NYU) - Department of Marketing ( email )

Henry Kaufman Ctr
44 W 4 St.
New York, NY
United States
212-998-0540 (Phone)
212-995-4006 (Fax)

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