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Signaling with costly acquisition of signals

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  • Bilancini, Ennio
  • Boncinelli, Leonardo

Abstract

In this paper we investigate the consequences of introducing a cost to observe the signal in an otherwise standard signaling game. Beyond identifying equilibria, which we contrast with those of a standard signaling game, we study their robustness to two important classes of refinements: acting through restrictions on out-of-equilibrium beliefs and through trembles. Our results suggest that more prominence should be given to the pooling outcome on the minimum signal.

Suggested Citation

  • Bilancini, Ennio & Boncinelli, Leonardo, 2018. "Signaling with costly acquisition of signals," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 141-150.
    • Handle: RePEc:eee:jeborg:v:145:y:2018:i:c:p:141-150
    DOI: 10.1016/j.jebo.2017.10.022
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    Cited by:

    1. Ennio Bilancini & Leonardo Boncinelli, 2021. "When market unraveling fails and mandatory disclosure backfires: Persuasion games with labeling and costly information acquisition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(3), pages 585-599, August.
    2. Michal Krol & Magdalena Ewa Krol, 2020. "On the strategic value of ‘shooting yourself in the foot’: an experimental study of burning money," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(1), pages 23-45, March.

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    More about this item

    Keywords

    Costly cognition; Costly signal acquisition; Pooling; Equilibrium refinements; Forward induction; Trembles;
    All these keywords.

    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

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