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On Signalling and Screening in Markets with Asymmetric Information

Author

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  • Anastasios Dosis

    (THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique, ESSEC Business School)

Abstract
The two games that are typically used to model markets with asymmetric information are the signalling game and the screening game. In the signalling game, an equilibrium may not be efficient because of the arbitrariness of off-the-equilibrium-path beliefs. In the screening game, a pure-strategy Nash equilibrium may fail to exist because of " cream-skimming " deviations. Perhaps surprisingly, I show how equilibrium generically exists and is efficient in a game that combines signalling and screening. The signalling part assures the existence of equilibrium, whereas the screening part prevents non-efficient allocations from being supported as equilibrium allocations .

Suggested Citation

  • Anastasios Dosis, 2016. "On Signalling and Screening in Markets with Asymmetric Information," Working Papers hal-01285190, HAL.
    • Handle: RePEc:hal:wpaper:hal-01285190
    Note: View the original document on HAL open archive server: https://essec.hal.science/hal-01285190v2
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    References listed on IDEAS

    as
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    7. Dosis, Anastasios, 2016. "An Efficient Mechanism for Competitive Markets with Adverse Selection," ESSEC Working Papers WP1604, ESSEC Research Center, ESSEC Business School.
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    13. Bester, Helmut, 1985. "Screening vs. Rationing in Credit Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 75(4), pages 850-855, September.
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    More about this item

    Keywords

    Signalling; screening; asymmetric information; information economics; existence; efficiency;
    All these keywords.

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