The fact that informational asymmetries impose a significant barrier in path of smooth functioning of markets has been well known in Economics since the 1970s. Communication and information exchange allow to mitigate these barriers to a certain extent. The existing Economic literature allows to get a good grasp of static effects of asymmetric information and communication. However, the dynamics of these phenomena is not completely understood. Settings with gradual learning, information acquisition, or otherwise changing informational environment present plenty of to date unanswered questions. This thesis aims to provide possible answers to at least some of these questions. Chapter 1 explores censorship in the context of product reviews. Sellers often have the power to censor the reviews of their products. The chapter explores the effect of these censorship policies in markets where some consumers are unaware of possible censorship. It finds that if the share of such "naive" consumers is not too large, then rational consumers treat any bad review that is revealed in equilibrium as good news about product quality. This makes bad reviews worth revealing and allows the seller to use them as a costly signal of his product's quality to rational consumers. Chapter 2 studies a dynamic communication game in the presence of adverse selection and career concerns. An expert of privately known competence, who cares about his reputation, chooses the timing of the forecast regarding the outcome of some future event. The chapter finds that in all equilibria in a sufficiently general class earlier reports are more credible. Further, any report hurts the expert's reputation in the short run, with later reports incurring larger penalties. Reputation of a silent expert, on the other hand, gradually improves over time. Chapter 3 explores a model of dynamic signaling through observable actions. It asks the question of how dynamic signaling can proceed in settings when complete separation is not possible in any single period. It shows that payoff-relevant signaling can only take place via attrition, when the weakest type gradually drops over time the attempts to blend in with stronger types. It also shows that conclusions regarding whether full information revelation is asymptotically possible depend crucially on the assumptions about the state space.

Creator

• Starkov, Egor

DOI

• https://doi.org/10.21985/n2-0zjt-3e44

Subject

• Economics
• Economic theory

Language

• en

Alternate Identifier

• etdadmin_upload_662831
• http://dissertations.umi.com/northwestern:14665

Date created

• 2019-01-01

Resource type

• Dissertation

Rights statement

• In Copyright