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Full-Text Articles in Social and Behavioral Sciences
Price Competition For An Informed Buyer, Giuseppe Moscarini, Marco Ottaviani
Price Competition For An Informed Buyer, Giuseppe Moscarini, Marco Ottaviani
Cowles Foundation Discussion Papers
We investigate the outcomes of simultaneous price competition in the presence of private information on the demand side. Each of two sellers offers a different variety of a good to a buyer endowed with a private binary signal on their relative quality. We analyze how the unique equilibrium of the game changes as a function of the (common) prior belief on the relative quality of the goods and the precision of the private information of the buyer. Competition is fierce, and the buyer enjoys high rents, when the prior belief is biased in favor of one good and private signals …
Jeffreys Prior Analysis Of The Simultaneous Equations Model In The Case With N + 1 Endogenous Variables, John C. Chao, Peter C.B. Phillips
Jeffreys Prior Analysis Of The Simultaneous Equations Model In The Case With N + 1 Endogenous Variables, John C. Chao, Peter C.B. Phillips
Cowles Foundation Discussion Papers
This paper analyzes the behavior of posterior distributions under the Jeffreys prior in a simultaneous equations model. The case under study is that of a general limited information setup with n +1 endogenous variables. The Jeffreys prior is shown to give rise to a marginal posterior density which has Cauchy-like tails similar to that exhibited by the exact finite sample distribution of the corresponding LIML estimator. A stronger correspondence is established in the special case of a just-identified orthonormal canonical model, where the posterior density under the Jeffreys prior is shown to have the same functional form as the density …