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Self-Reported Signaling

Author

Listed:
  • Thomas Jungbauer
  • Michael Waldman

Abstract

In many real-world settings, an action that affects the value of a product or service is self-reported rather than publicly observable. We investigate self-reporting when self-reports serve as a signal of sender productivity. In our model, a sender chooses an action and then sends a message concerning the action to multiple receivers. Receivers then bid for the sender's service after deciding whether to audit the sender. We find that self-reporting can reverse the standard result in signaling models that there is overinvestment in the action and that the possibility of misrepresentation may in fact improve welfare given self-reported signaling.

Suggested Citation

  • Thomas Jungbauer & Michael Waldman, 2023. "Self-Reported Signaling," American Economic Journal: Microeconomics, American Economic Association, vol. 15(3), pages 78-117, August.
    • Handle: RePEc:aea:aejmic:v:15:y:2023:i:3:p:78-117
    DOI: 10.1257/mic.20210204
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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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