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A tree formulation for signaling games

Author

Listed:
  • Dassiou, X.
  • Glycopantis, D.

Abstract

We provide a detailed presentation and complete analysis of the sender/receiver Lewis signaling game using a game theory extensive form, decision tree formulation. The analysis employs well established game theory ideas and concepts. We establish the existence of four perfect Bayesian equilibria in this game. We explain which equilibrium is the most likely to prevail. Our explanation provides an essential step for understanding the formation of a language convention. Further, we discuss the informational content of such signals and calibrate a more detailed definition of a true (“correct”) signal in terms of the payoffs of the sender and the receiver.

Suggested Citation

  • Dassiou, X. & Glycopantis, D., 2011. "A tree formulation for signaling games," Working Papers 11/07, Department of Economics, City University London.
  • Handle: RePEc:cty:dpaper:11/07
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    File URL: http://openaccess.city.ac.uk/1455/1/A_Tree_Formulation_for_Signaling_Games.pdf
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    References listed on IDEAS

    as
    1. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, January.
    2. Jeffrey Barrett, 2009. "The Evolution of Coding in Signaling Games," Theory and Decision, Springer, vol. 67(2), pages 223-237, August.
    3. Binmore, Ken, 2007. "Playing for Real: A Text on Game Theory," OUP Catalogue, Oxford University Press, number 9780195300574.
    4. Choi, Chong Ju & Dassiou, Xeni & Gettings, Stephen, 2000. "Herding Behaviour and the Size of Customer Base as a Commitment to Quality," Economica, London School of Economics and Political Science, vol. 67(267), pages 375-398, August.
    5. Welch, Ivo, 1992. " Sequential Sales, Learning, and Cascades," Journal of Finance, American Finance Association, vol. 47(2), pages 695-732, June.
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