Dynamic signaling and market breakdown
نویسندگان
چکیده
We consider the effects a public revelation of information (e.g. rating, grade) has on trading in a dynamic signaling model. Competing buyers offer prices to a privately informed seller who can reject them and delay trade. Delay is costly and the seller has no commitment to its duration. The external public information allows for signaling in equilibrium. More interestingly, we characterize the dynamics of trade and prices. If signals are noisy, no trade takes place just before the revelation of external information. If signals are fully revealing, then trade occurs even close to revelation, however, transaction prices are discontinuous. © 2005 Elsevier Inc. All rights reserved. JEL classification: C73; C78; D82
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ورودعنوان ژورنال:
- J. Economic Theory
دوره 133 شماره
صفحات -
تاریخ انتشار 2007