IFF YOU WANT ME, I DON'T WANT YOU

Abstract

The usual assumption in models of asymmetric information is that I know my attributes and you do not. But sometimes the asymmetry seems to be reversed: You (a woman, a firm) know better than I (a man, a job applicant) my market value. This may result in a dilemma because equilibrium strategies may be described by the title of this paper. (Iff means: if and only if.) The result resembles the “No-Trade-Theorem” of Milgrom and Stokey (1982) but cannot be derived from it.

I would like to thank two anonymous referees and in particular the editor of this journal for very helpful suggestions to improve the paper.

Notes

¹Is also credited to W. C. Fields.

²For example, Akerlof (1973); for an overview see Molho (1997)

³A nice brain teaser with such an example is Stewart (1998).

⁴As types in Game Theory are described by the private information which an agent has, a man's type is described by f and a woman's type by m. A complete description of an agent consists of his/her kind and type.

⁵There are further papers on the No Trade Theorem (see Morris and Skiadas, 2000, and the literature cites there); but for the comparison with the Mating Game these are not closer candidates.

⁶ Milgrom and Stokey (1982) gave in a footnote the same quotation of Groucho Marx as I did. To apply their theorem, they must assume that the state “Groucho is not a member of a club” is Pareto-optimal. (I got to know about the Milgrom and Stokey paper and about their same citation only after a first version of my paper had been written.)

⁷In such a model, one has to expect “bluffing,” i.e., not showing interest for an interesting partner.