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Repeated signaling games

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  • Kaya, Ayça

Abstract

I analyze a class of repeated signaling games in which the informed player's type is persistent and the history of actions is perfectly observable. In this context, a large class of possibly complex sequences of signals can be supported as the separating equilibrium actions of the "strong type" of the informed player. I characterize the set of such sequences. I also characterize the sequences of signals in least cost separating equilibria (LCSE) of these games. In doing this, I introduce a state variable that can be interpreted as a measure of reputation. This gives the optimization problem characterizing the LCSE a recursive structure. I show that, in general, the equilibrium path sequences of signals have a simple structure. The shapes of the optimal sequences depend critically on the relative concavities of the payoff functions of different types, which measure the relative preferences towards payoff smoothing.

Suggested Citation

  • Kaya, Ayça, 2009. "Repeated signaling games," Games and Economic Behavior, Elsevier, vol. 66(2), pages 841-854, July.
  • Handle: RePEc:eee:gamebe:v:66:y:2009:i:2:p:841-854
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    Citations

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    Cited by:

    1. Sander Heinsalu, 2017. "Good signals gone bad: dynamic signalling with switching efforts," Papers 1707.04699, arXiv.org.
    2. Pires Cesaltina Pacheco & Catalão-Lopes Margarida, 2013. "Economies of Scope, Entry Deterrence and Welfare," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 13(1), pages 419-452, June.
    3. Trevon D. Logan & Manisha Shah, 2013. "Face Value: Information and Signaling in an Illegal Market," Southern Economic Journal, Southern Economic Association, vol. 79(3), pages 529-564, January.
    4. Andriy Zapechelnyuk & Ro'i Zultan, 2008. "Job Market Signaling and Job Search," Discussion Paper Series dp488, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    5. Sanghoon Lee, 2007. "The Timing Of Signaling: To Study In High School Or In College?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 785-807, August.
    6. Liu, Qingmin & Skrzypacz, Andrzej, 2014. "Limited records and reputation bubbles," Journal of Economic Theory, Elsevier, vol. 151(C), pages 2-29.
    7. Christopher Gedge & James W. Roberts & Andrew Sweeting, 2014. "A Model of Dynamic Limit Pricing with an Application to the Airline Industry," NBER Working Papers 20293, National Bureau of Economic Research, Inc.
    8. Jun, Byoung Heon & Park, In-Uck, 2010. "Anti-Limit Pricing," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 51(2), pages 1-22, December.
    9. Chia-Hui Chen, 2012. "Type composition, career concerns, and signaling efforts," Theory and Decision, Springer, vol. 73(3), pages 401-422, September.
    10. Brendan Daley & Erik Snowberg, 2007. "A MultiDimensional Signaling Model of Campaign Finance," Discussion Papers 06-027, Stanford Institute for Economic Policy Research.
    11. repec:eee:mateco:v:73:y:2017:i:c:p:132-141 is not listed on IDEAS
    12. Toxvaerd, Flavio, 2010. "Dynamic Limit Pricing," CEPR Discussion Papers 8104, C.E.P.R. Discussion Papers.
    13. Dilmé, Francesc, 2017. "Noisy signaling in discrete time," Journal of Mathematical Economics, Elsevier, vol. 68(C), pages 13-25.
    14. Félix Muñoz-García & Heriberto González Lozano, 2009. "“Last-chance” sales: what makes them credible?," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 61-80, May.
    15. Ayca Kaya, 2013. "Dynamics of price and advertising as quality signals: anything goes," Economics Bulletin, AccessEcon, vol. 33(2), pages 1556-1564.

    More about this item

    Keywords

    Signaling games Dynamic games Repeated games Asymmetric information;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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