Information acquisition interactions in two-player quadratic games (Q2453498)

The author discusses the following two-person non-zero-sum \textit{quadratic game} under uncertainty, played in two stages: (1) In the first stage, nature selects a state of world \(\;\theta\in \mathbb{R}\) according to a normal distribution, unobservable for the players. Next, after making an information choice by each of them, nature sends private signals \(s_1\) and \(s_2\) to players 1 and 2, respectively; (2) in the second stage, players 1 and 2, based on the obtained signals, simultaneously choose actions \(a_1\) and \(a_2\), respectively. \noindent The payoffs of the players depend on the vector \({\mathbf c}=(a_1,a_2,\theta)\) and are given by the following (common) quadratic function: \(v({\mathbf c}) = {\mathbf c}A{\mathbf c}^T\), where \(A\) is an \((3\times 3)\)-matrix defined by five parameters \(\lambda, \pi, \rho, \phi\) and \(\delta\), describing different aspects of the players' preferences. In the paper the author finds a characterization of the optimal action strategies showing that they are unique, and he analyzes the relation existing between the set of parameters \(\lambda, \pi, \rho, \phi\) and \(\delta\) and the sign of slope of of the players' best responses.