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The evolutionary dynamics of costly signaling

Author

Listed:
  • Josef Hofbauer

    (University of Vienna)

  • Christina Pawlowitsch

    (University Paris-Panthéon-Assas)

Abstract

The theory of costly signaling (Spence in Q J Econ 87:355–374, 1973) is a well-established paradigm in economics and theoretical biology, where it is also known as the Handicap Principle (Zahavi J Theor Biol 53:205–214, 1975). Nevertheless, while costly-signaling games have been extensively studied in classical game theory (focused on Nash equilibrium and its refinements), evolutionary dynamics in costly-signaling games are relatively unexplored. This paper gives a comprehensive account of evolutionary dynamics in two canonical classes of games with two states of nature, two signals, and two possible reactions to signals: a model with differential signaling costs (similar to Spence’s model) and a model with differential benefits from success (similar to Milgrom and Roberts’s in J Polit Econ 94:796–821, 1986, respectively Grafen’s J Theor Biol 144:517–546, 1990, model). We first use index theory to give a necessary condition for the dynamic stability of the equilibria in these games. Then, we study the replicator dynamics and the best-response dynamics. Along the way, we relate our findings to classical equilibrium refinements that test for the plausibility of beliefs off the equilibrium path.

Suggested Citation

  • Josef Hofbauer & Christina Pawlowitsch, 2025. "The evolutionary dynamics of costly signaling," International Journal of Game Theory, Springer;Game Theory Society, vol. 54(1), pages 1-53, June.
    • Handle: RePEc:spr:jogath:v:54:y:2025:i:1:d:10.1007_s00182-025-00927-5
    DOI: 10.1007/s00182-025-00927-5
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