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Signaling to analogical reasoners who can acquire costly information

Author

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  • Bilancini, Ennio
  • Boncinelli, Leonardo

Abstract

We show that separation in signaling games can be obtained without the single crossing condition, in a model where the receiver reasons analogically across a pair of states and can acquire costly information on the sender's type. Beyond ordinary separation (high type sends high signal, low type sends low signal) we find that also reverse separation is sustainable in equilibrium (high type sends low signal, low type sends high signal). Further, reverse separation in one state is obtained only if ordinary separation occurs in the other state. Pooling is possible and can go along with ordinary separation in one state.

Suggested Citation

  • Bilancini, Ennio & Boncinelli, Leonardo, 2018. "Signaling to analogical reasoners who can acquire costly information," Games and Economic Behavior, Elsevier, vol. 110(C), pages 50-57.
    • Handle: RePEc:eee:gamebe:v:110:y:2018:i:c:p:50-57
    DOI: 10.1016/j.geb.2018.03.008
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    References listed on IDEAS

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    Cited by:

    1. Hagenbach, Jeanne & Koessler, Frédéric, 2020. "Cheap talk with coarse understanding," Games and Economic Behavior, Elsevier, vol. 124(C), pages 105-121.
    2. Philippe Jehiel, 2022. "Analogy-Based Expectation Equilibrium and Related Concepts:Theory, Applications, and Beyond," Working Papers halshs-03735680, HAL.
    3. Roberto Rozzi, 2021. "Competing Conventions with Costly Information Acquisition," Games, MDPI, vol. 12(3), pages 1-29, June.

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    More about this item

    Keywords

    Analogical reasoning; Costly acquisition of information; Signaling without single crossing; Reverse separation;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • 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

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