Pecuniary emulation and invidious distinction: Signaling under behavioral diversity

Junichiro Ishida and Wing Suen

Games and Economic Behavior, 2024, vol. 147, issue C, 449-459

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.

Keywords: Least-cost separating equilibrium; Insensitivity to prior; Behavioral diversity; Equilibrium emulation (search for similar items in EconPapers)
JEL-codes: D82 Z13 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Pecuniary Emulation and Invidious Distinction: Signaling under Behavioral Diversity (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:147:y:2024:i:c:p:449-459

DOI: 10.1016/j.geb.2024.08.008

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