Pecuniary Emulation and Invidious Distinction: Signaling under Behavioral Diversity

Junichiro Ishida and Wing Suen

ISER Discussion Paper from Institute of Social and Economic Research, The University of Osaka

Abstract: We introduce behavioral diversity to an otherwise standard signaling model, in which a fraction of agents choose their signaling actions according to an exogenous distribution. These behavioral agents provide opportunities for strategic low-type agents to successfully emulate higher types in equilibrium, which in turn reduces the cost for strategic high-type agents to separate from lower types. Behavioral diversity thus improves the equilibrium payoffs to all types of strategic agents. The model also exhibits a convergence property which is intuitively more appealing than the least-cost separating equilibrium of the standard setting.

Date: 2023-10
New Economics Papers: this item is included in nep-cta, nep-evo, nep-gth and nep-mic
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https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2023/DP1216.pdf

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Journal Article: Pecuniary emulation and invidious distinction: Signaling under behavioral diversity (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:1216

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