Hypothesis testing equilibrium in signaling games

Lan Sun
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Lan Sun: Center for Mathematical Economics, Bielefeld University

No 557, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: In this paper, we propose a definition of Hypothesis Testing Equilibrium (HTE) for general signaling games with non-Bayesian players nested by an updating rule according to Hypothesis Testing model characterized by Ortoleva (2012). An HTE may be different from a sequential Nash equilibrium because of the dynamic inconsistency. However, when player 2 only takes zero-probability message as an unexpected news, an HTE is a refinement of sequential Nash equilibrium and it survives Intuitive Criterion, but not vice versa. We provide existence theorem covering a broad class of signaling games often studied in economics, and the constrained HTE is unique in such signaling games.

Keywords: Signaling Games; Hypothesis Testing Equilibrium; Equilibrium Refinement (search for similar items in EconPapers)
Pages: 45
Date: 2016-05-30
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-mic
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https://pub.uni-bielefeld.de/download/2903536/2903537 First Version, 2016 (application/x-download)

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Persistent link: https://EconPapers.repec.org/RePEc:bie:wpaper:557

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