The evolution of Horn's rule
AbstractHornâ€™s rule says that messages can be kept ambiguous if only a single interpretation is plausible. Speakers only perform costly disambiguation to convey surprising information. This paper shows that, while noncooperative game theory cannot justify Hornâ€™s rule, evolutionary game theory can. In order to model the evolution of signalling, the pooling equilibrium needs to be oneâ€™s starting point. But in such an equilibrium, the plausible interpretation is made, and the receiver is therefore already predisposed to interpret absence of a signal as referring to a plausible event. From there on, a marked signal referring to an implausible event can evolve. At the same time, the paper identifies an exception to Hornâ€™s rule. If giving a plausible interpretation for an implausible event is very costly, then in the pooling equilibrium the implausible interpretation is always made. In this exceptional case, only an inefficient separating equilibrium disobeying Hornâ€™s rule can evolve.
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Bibliographic InfoPaper provided by Utrecht School of Economics in its series Working Papers with number 07-12.
Length: 17 pages
Date of creation: 2007
Date of revision:
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Other versions of this item:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-05-19 (All new papers)
- NEP-EVO-2007-05-19 (Evolutionary Economics)
- NEP-GTH-2007-05-19 (Game Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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