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Rationalization In Signaling Games: Theory And Applications

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  • PIERPAOLO BATTIGALLI

    ()
    (Bocconi University and IGIER, Via Salasco, 5, 20136, Milano, Italy)

Abstract

Focusing on signaling games, I illustrate the relevance of the rationalizability approach for the analysis multistage games with incomplete information. I define a class of iterative solution procedures, featuring a notion of "forward induction": the Receiver tries to explain the Sender's message in a way which is consistent with the Sender's strategic sophistication and certain given restrictions on beliefs. The approach is applied to some numerical examples and economic models. In a standard model with verifiable messages a full disclosure result is obtained. In a model of job market signaling the best separating equilibrium emerges as the unique rationalizable outcome only when the high and low types are sufficiently different. Otherwise, rationalizability only puts bounds on the education choices of different types.

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Bibliographic Info

Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal International Game Theory Review.

Volume (Year): 08 (2006)
Issue (Month): 01 ()
Pages: 67-93

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Handle: RePEc:wsi:igtrxx:v:08:y:2006:i:01:p:67-93

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Keywords: Incomplete information; signaling; rationalization; Subject Classification: C72; Subject Classification: D82;

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Cited by:
  1. Burkhard Schipper & Hee Yeul Woo, 2012. "Political Awareness and Microtargeting of Voters in Electoral Competition," Working Papers 124, University of California, Davis, Department of Economics.
  2. Burkhard Schipper & Hee Yeul Woo, 2014. "Political Awareness, Microtargeting of Voters, and Negative Electoral Campaigning," Working Papers 148, University of California, Davis, Department of Economics.

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