Multidimensional Signaling with a Resource Constraint

Seungjin Han and Alex Sam

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Abstract: We study multidimensional signaling (cognitive/non-cognitive) as a sender's portfolio choice with a resource constraint. We establish the existence of a unique monotone D1 equilibrium where the cognitive (non-cognitive) signal increases (decreases) in sender type and the sum of the two increases in sender type. The equilibrium is characterized by two threshold sender types. The low threshold is one where a kink occurs in signaling. The constraint is binding only for sender types above it. The high threshold is the other one, above which all types spend all the resources in cognitive signal with pooling and discontinuity on the top.

Date: 2024-02, Revised 2024-03
New Economics Papers: this item is included in nep-gth, nep-mic and nep-neu
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