Work

Testing Information Ordering for Strategic Agents

Year: 2024

Type: preprint

Abstract: Specifying the information structure in strategic environments is difficult for empirical researchers. We develop a test of information ordering that examines whether the true information structure is at least as informative as a proposed baseline. Using Bayes Correlated Equilibrium (BCE), we translate the ordering of information structures into testable moment inequalities and establish uniform asymptotic validity for our testing procedure. In an application to U.S. airline markets, we test whether hub airlines have informational advantages beyond cost and demand benefits. We reject the privileged information hypothesis, with rejections concentrated in large, competitive markets.

Source: RePEc: Research Papers in Economics

DOI: 10.48550/arxiv.2402.19425

Authors: Han, Sukjin, Kaido, Hiroaki, Magnolfi, Lorenzo

Institutions: University of Bristol, Boston University, University of Wisconsin–Madison

Language: English

Topic: Merger and Competition Analysis

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W6891854246

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