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Only time will tell: Credible dynamic signaling

Egor Starkov

Journal of Mathematical Economics, 2023, vol. 109, issue C

Abstract: This paper characterizes informational outcomes in a model of dynamic signaling with vanishing commitment power. It shows that contrary to popular belief, informative equilibria with payoff-relevant signaling can exist without requiring unreasonable off-path beliefs. The paper provides a sharp characterization of possible separating equilibria: all signaling must take place through attrition, when the weakest type mixes between revealing own type and pooling with the stronger types. The framework explored in the paper is general, imposing only minimal assumptions on payoff monotonicity and single-crossing. Applications to bargaining, monopoly price signaling, and labor market signaling are developed to demonstrate the results in specific contexts.

Keywords: Dynamic signaling; Repeated signaling; Reputation; Attrition (search for similar items in EconPapers)
Date: 2023
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Working Paper: Only Time Will Tell: Credible Dynamic Signaling (2022) Downloads
Working Paper: Only Time Will Tell: Credible Dynamic Signaling (2020) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:109:y:2023:i:c:s0304406823000873

DOI: 10.1016/j.jmateco.2023.102894

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