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Why Voting? A Welfare Analysis

Moritz Drexl and Andreas Kleiner ()

American Economic Journal: Microeconomics, 2018, vol. 10, issue 3, 253-71

Abstract: This article studies costly signaling. The signaling effort is chosen in multiple periods and observed with noise. The signaler benefits from the belief of the market, not directly from the effort or the signal. Optimal signaling behavior in time-varying environments trades off effort-smoothing and influencing belief exactly when it yields a return. If the return to signaling first increases over time and then decreases, then the optimal effort rises slowly, reaches its maximum before the return does, and declines quickly. Advertising data displays this pattern.

JEL-codes: D71 D72 D82 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/mic.20160337
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