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Comparative statics of a signaling game : An experimental study

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  • Potters, J.J.M.

    (Tilburg University, School of Economics and Management)

  • van Winden, F.

Abstract

In this paper a simple and basic signaling game is studied in an experimental environment. First, we check whether we can replicate some of the findings in the literature concerning equilibrium selection and the use and impact of costly signals. Second, and foremost, the comparative statics implications of the game are studied. The experimental results are related to the predictions of two competing behavioral models: a game model, in which subjects are assumed to behave in line with (refined) sequential equilibrium theory, and a decision model, in which subjects are assumed to behave as non-strategic decision makers. The experimental outcomes replicate the finding in the literature that costly messages are sent more frequently by 'higher' sender types (whose information is such that persuasion is also profitable to the responder), and that such messages have an impact on the behavior of the responder. These results are consistent with (versions of) both the game model and the decision model. The comparative statics results, however, clearly point in the direction of the decision model. Play is most strongly affected by 'own' payoff parameters, as predicted by the decision model, and less so by opponent's payoff parameters, as predicted by the mixed strategies of the refined sequential equilibrium. Particularly, a decision model in which players are assumed to adapt beliefs about opponents' choice probabilities in response to experience in previous play, appears to succeed best in organizing the data.
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  • Potters, J.J.M. & van Winden, F., 1995. "Comparative statics of a signaling game : An experimental study," Other publications TiSEM 339b7c1e-81c5-4725-823a-c, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:339b7c1e-81c5-4725-823a-cdd0145dd2d5
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    3. Friedel Bolle & Philipp E. Otto, 2010. "A Price Is a Signal: on Intrinsic Motivation, Crowding‐out, and Crowding‐in," Kyklos, Wiley Blackwell, vol. 63(1), pages 9-22, February.
    4. Cervantes, Laura & Vilalta y Perdomo, Carlos J., 2006. "Una Evaluación Geográfica de la Política de Educación Media Superior de la Ciudad de México," EGAP Working Papers 2006-07, Tecnológico de Monterrey, Campus Ciudad de México.
    5. Kübler, Dorothea & Müller, Wieland & Normann, Hans-Theo, 2008. "Job-market signaling and screening: An experimental comparison," Games and Economic Behavior, Elsevier, vol. 64(1), pages 219-236, September.
    6. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2015. "Privacy concerns, voluntary disclosure of information, and unraveling: An experiment," European Economic Review, Elsevier, vol. 75(C), pages 43-59.
    7. Church, Bryan K. & Peytcheva, Marietta & Yu, Wei & Singtokul, Ong-Ard, 2015. "Perspective taking in auditor–manager interactions: An experimental investigation of auditor behavior," Accounting, Organizations and Society, Elsevier, vol. 45(C), pages 40-51.
    8. S. Salman Hussain, 2000. "Green Consumerism and Ecolabelling: A Strategic Behavioural Model," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(1), pages 77-89, January.
    9. Theo Offerman & Jan Potters & Joep Sonnemans, 2002. "Imitation and Belief Learning in an Oligopoly Experiment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(4), pages 973-997.
    10. Jeitschko, Thomas D. & Normann, Hans-Theo, 2012. "Signaling in deterministic and stochastic settings," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 39-55.
    11. Daniele Nosenzo & Theo Offerman & Martin Sefton & Ailko van der Veen, 2010. "Inducing Good Behavior: Bonuses versus Fines in Inspection Games," Discussion Papers 2010-21, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    12. Kübler, D. & Müller, W. & Normann, H.T., 2008. "Job-market signalling and screening : An experimental study," Other publications TiSEM e60074dd-75cb-47df-965c-a, Tilburg University, School of Economics and Management.
    13. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2022. "Behavioral forces driving information unraveling," Discussion Papers, Research Unit: Market Behavior SP II 2022-206, WZB Berlin Social Science Center.
    14. Enrica Carbone & Vinayak V. Dixit & E. Elisabet Rutstrom, 2022. "Should I stay or should I go? Congestion pricing and equilibrium selection in a transportation network," Theory and Decision, Springer, vol. 93(3), pages 535-562, October.
    15. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2023. "Behavioral forces driving information unraveling," Discussion Papers, Research Unit: Market Behavior SP II 2023-207, WZB Berlin Social Science Center.

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