Information transmission in dynamic Bayesian duopoly models

In economic models in which agents are asymmetrically informed about the structural parameters of the economy the acquisition or manipulation of information plays a crucial role. The incentive to affect the flow of information is especially important in models in which choice variables, and hence market variables, generate information used for future decisions. In this paper we study two different reasons why agents might change their (myopically) optimal decisions when they take account of the informational content of their decisions. The first is when informed agents manipulate the informational content of observed market variables through their own decisions in order to influence the learning of uninformed agents. The second is when uninformed agents "experiment" in order to influence the flow of information on which their own future decisions are based.