Signaling with Costly Acquisition of Signals
In this paper we identify a novel reason why signaling may fail to separate types, which is specific to cases where the receiver has to incur a cost to acquire the signal sent by the sender. If the receiver chooses not to incur the acquisition cost, then all sender's types find it optimal to pool on the least costly signal; also, if all sender's types pool on the least costly signal, then the receiver finds it optimal not to incur the acquisition cost. This kind of coordination failure makes the resulting pooling equilibrium extremely robust, even when costs of signal acquisition are very small. Also, pooling is shown to be robust to all refinements based on out-of-equilibrium beliefs, even when the sender can engage in further signaling that can act as an "invitation" to acquire the main signal, and when acquisition costs are smooth and depend on the receiver's effort to acquire the signal. These results provide a new source of interest in pooling equilibria.
|Date of creation:||Jun 2014|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.recent.unimore.it/|
More information through EDIRC
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.:
- Banks, Jeffrey S. & Sobel, Joel., 1985.
"Equilibrium Selection in Signaling Games,"
565, California Institute of Technology, Division of the Humanities and Social Sciences.
- In-Koo Cho & David M. Kreps, 1987.
"Signaling Games and Stable Equilibria,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 102(2), pages 179-221.
- Oliveros, Santiago, 2013. "Abstention, ideology and information acquisition," Journal of Economic Theory, Elsevier, vol. 148(3), pages 871-902.
- Ennio Bilancini & Leonardo Boncinelli, 2014. "Small Noise in Signaling Selects Pooling on Minimum Signal," Center for Economic Research (RECent) 101, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
- Kohlberg, Elon & Mertens, Jean-Francois, 1986.
"On the Strategic Stability of Equilibria,"
Econometric Society, vol. 54(5), pages 1003-37, September.
- KOHLBERG, Elon & MERTENS, Jean-François, . "On the strategic stability of equilibria," CORE Discussion Papers RP 716, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- E. Kohlberg & J.-F. Mertens, 1998. "On the Strategic Stability of Equilibria," Levine's Working Paper Archive 445, David K. Levine.
- Andrew Caplin & Mark Dean, 2015.
"Revealed Preference, Rational Inattention, and Costly Information Acquisition,"
American Economic Review,
American Economic Association, vol. 105(7), pages 2183-2203, July.
- Andrew Caplin & Mark Dean, 2014. "Revealed Preference, Rational Inattention, and Costly Information Acquisition," NBER Working Papers 19876, National Bureau of Economic Research, Inc.
- Qingmin Liu, 2011. "Information Acquisition and Reputation Dynamics," Review of Economic Studies, Oxford University Press, vol. 78(4), pages 1400-1425.
- Xavier Gabaix & David Laibson & Guillermo Moloche & Stephen Weinberg, 2006. "Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model," American Economic Review, American Economic Association, vol. 96(4), pages 1043-1068, September.
- Dewatripont, Mathias & Tirole, Jean, 2004.
"Modes of Communication,"
IDEI Working Papers
323, Institut d'Économie Industrielle (IDEI), Toulouse.
- John G. Riley, 2001. "Silver Signals: Twenty-Five Years of Screening and Signaling," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 432-478, June.
- Ennio Bilancini & Leonardo Boncinelli, 2014.
"Persuasion with Reference Cues and Elaboration Costs,"
Center for Economic Research (RECent)
102, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
- Ennio Bilancini & Leonardo Boncinelli, 2014. "Persuasion with Reference Cues and Elaboration Costs," Working Papers - Economics wp2014_04.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
- Xianwen Shi, 2007.
"Optimal Auctions with Information Acquisition,"
tecipa-302, University of Toronto, Department of Economics.
- Mailath George J. & Okuno-Fujiwara Masahiro & Postlewaite Andrew, 1993. "Belief-Based Refinements in Signalling Games," Journal of Economic Theory, Elsevier, vol. 60(2), pages 241-276, August.
- Cho, In-Koo & Sobel, Joel, 1990. "Strategic stability and uniqueness in signaling games," Journal of Economic Theory, Elsevier, vol. 50(2), pages 381-413, April.
- Grossman, Sanford J. & Perry, Motty, 1986. "Perfect sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 39(1), pages 97-119, June.
- Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
When requesting a correction, please mention this item's handle: RePEc:mod:recent:100. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.