Tilman Börgers
When are signals complements or substitutes?
Börgers, Tilman; Hernando-Veciana, Angel; Krähmer, Daniel
Authors
Professor Angel Hernando-Veciana angel.hernando-veciana@durham.ac.uk
Visiting Professor
Daniel Krähmer
Abstract
The paper introduces a notion of complementarity (substitutability) of two signals which requires that in all decision problems each signal becomes more (less) valuable when the other signal becomes available. We provide a general characterization which relates complementarity and substitutability to a Blackwell comparison of two auxiliary signals. In a setting with a binary state space and binary signals, we find an explicit characterization that permits an intuitive interpretation of complementarity and substitutability. We demonstrate how these conditions extend to more general settings. We also illustrate the implications of our concepts for three economic applications: information disclosure in auctions, information aggregation through voting, and polarization of beliefs.
Citation
Börgers, T., Hernando-Veciana, A., & Krähmer, D. (2013). When are signals complements or substitutes?. Journal of Economic Theory, 148(1), 165-195. https://doi.org/10.1016/j.jet.2012.12.012
Journal Article Type | Article |
---|---|
Acceptance Date | Jul 20, 2012 |
Online Publication Date | Dec 13, 2012 |
Publication Date | Jan 1, 2013 |
Deposit Date | Jun 15, 2018 |
Publicly Available Date | Jun 28, 2018 |
Journal | Journal of Economic Theory |
Print ISSN | 0022-0531 |
Electronic ISSN | 1095-7235 |
Publisher | Elsevier |
Peer Reviewed | Peer Reviewed |
Volume | 148 |
Issue | 1 |
Pages | 165-195 |
DOI | https://doi.org/10.1016/j.jet.2012.12.012 |
Public URL | https://durham-repository.worktribe.com/output/1328701 |
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http://creativecommons.org/licenses/by-nc-nd/4.0/
Copyright Statement
© 2012 This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
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