On Signalling and Screening in Markets with Asymmetric Information

Anastasios Dosis (1, 2)

1 THEMA - Théorie économique, modélisation et applications
2 ESSEC Business School

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 .

Mots clés: Signalling; screening; asymmetric information; information economics; existence; efficiency

Domaines: Gestion et management

Anastasios Dosis. On Signalling and Screening in Markets with Asymmetric Information. 2016. ⟨hal-01285190v2⟩