Strategic Information Revelation

Abstract

We analyze the problem in which agents have non-public information and are to play an asymmetric information game. The agents may reveal some or all of their information to other agents prior to playing this game. Revelation is via exogenously specified certifiable statements. The equilibria resulting from various revelation strategies are used to determine equilibrium revelation of information. Sufficient conditions are provided for complete revelation of all private information. A number of examples are provided illustrating when revelation will or will not occur in commonly analyzed games. Many economic problems are characterized by the presence of both strategic behaviour on the part of individuals and by asymmetric information. Models encompassing both of these characteristics have been used successfully to examine questions in many fields, usually using the concept of Bayesian-Nash equilibrium as the solution concept. Typically the agents' information is given exogenously and is fixed throughout the analysis. Modelling the information structure as static is appropriate for some problems, but not for all, in particular, situations that are inherently dynamic. Most economic encounters allow for some interchange between the agents before the outcome is settled irrevocably. In such circumstances it is possible that at least one or more of the agents possessing non-public information may be able to reveal part or all of his information to one or all of the other agents in the economy during the course of their contact. To the extent that such a communication is believed by the other agents, the priors of the other agents will change and we will have what is in essence a new asymmetric information game (new in