Self-Reported Signaling

Thomas Jungbauer and Michael Waldman

American Economic Journal: Microeconomics, 2023, vol. 15, issue 3, 78-117

Abstract: In many real-world settings, an action that affects the value of a product or service is self-reported rather than publicly observable. We investigate self-reporting when self-reports serve as a signal of sender productivity. In our model, a sender chooses an action and then sends a message concerning the action to multiple receivers. Receivers then bid for the sender's service after deciding whether to audit the sender. We find that self-reporting can reverse the standard result in signaling models that there is overinvestment in the action and that the possibility of misrepresentation may in fact improve welfare given self-reported signaling.

JEL-codes: D82 D83 I23 I26 J24 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1257/mic.20210204

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