Table of contents
1. Introduction................................................................................................... 7
2. Model........................................................................................................... 10
3. Cost uncertainty...........................................................................................14
4. Signalling game 1: Incentives to signal that costs are high.........................16
Sequential equilibrium................................................................................. 18
Separating equilibrium................................................................................ 19
5. Information structure and correlation of costs.............................................23
6. The signalling game 2: Incentives to signal that costs are low....................26
7. Relaxing the assumptions............................................................................30
The curse of the initial mover......................................................................31
Alternative specification of the information structure.................................32
8. Conclusions ................................................................................................. 36
9. Literature..................................................................................................... 38
10. Appendixes.................................................................................................. 40
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