Strategic information manipulation in duopolies

Leonard J. Mirman, Larry Samuelson, Edward Schlee

Research output: Contribution to journalArticle

51 Scopus citations

Abstract

This paper studies a duopoly market in which firms can draw inferences concerning (uncertain) market demand from observations of their outputs and market price. Firms may adjust their outputs away from myopically optimal levels to affect the informativeness of the market price. Because firms’ quantities are observed, firms can manipulate the extent to which belief revision occurs rather than the direction in which beliefs are revised (as in signal-jamming models). We develop conditions and present examples under which the value of information is positive and negative and under which firms will increase or decrease quantity to manipulate information. Journal of Economic Literature Classification Numbers: D80, L13.

Original languageEnglish (US)
Pages (from-to)363-384
Number of pages22
JournalJournal of Economic Theory
Volume62
Issue number2
DOIs
StatePublished - Apr 1994

ASJC Scopus subject areas

  • Economics and Econometrics

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