Abstract:We study a signaling game between two firms competing to have their product chosen by a principal. The products have (real-valued) qualities, which are drawn i.i.d. from a common prior. The principal aims to choose the better of the two products, but the quality of a product can only be estimated via a coarse-grained threshold test: given a threshold θ, the principal learns whether a product's quality exceeds θ or fails to do so.We study this selection problem under two types of interactions. In the first, the… Show more
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