We study the profit-maximizing mechanism in bilateral trade with interdependent valuations. The seller privately observes the item's quality, while the buyer privately knows his type of valuation. The seller's valuation only depends on the quality, and the buyer's valuation depends on both the...

We study the dominant separating equilibrium that maximizes the sender's payoff in quadratic signaling games. We relax the common and restrictive belief monotonicity assumption. We introduce a game characteristic called discriminant and show that there exists a linear incentive compatible...