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Econometrica Vol. 90 No. 3 2022

Signaling Under Double‐Crossing Preferences

Chia-Hui Chen1; Junichiro Ishida2; Wing Suen3

1 Institute of Economic Research, Kyoto University · 2 Institute of Social and Economic Research, Osaka University · 3 Faculty of Business and Economics, University of Hong Kong

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Abstract

This paper provides a general analysis of signaling under double‐crossing preferences with a continuum of types. There are natural economic environments where the indifference curves of two types cross twice, such that the celebrated single‐crossing property fails to hold. Equilibrium exhibits a threshold type below which types choose actions that are fully revealing and above which they pool in a pairwise fashion, with a gap separating the actions chosen by these two sets of types. The resulting signaling action is quasi‐concave in type. We also provide an algorithm to establish equilibrium existence by construction.

DOI
10.3982/ecta19210
Volume
90
Issue
3
Pages
1225-1260
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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