A tree formulation for signaling games

X. Dassiou and D. Glycopantis

Working Papers from Department of Economics, City University London

Abstract: We provide a detailed presentation and complete analysis of the sender/receiver Lewis signaling game using a game theory extensive form, decision tree formulation. The analysis employs well established game theory ideas and concepts. We establish the existence of four perfect Bayesian equilibria in this game. We explain which equilibrium is the most likely to prevail. Our explanation provides an essential step for understanding the formation of a language convention. Further, we discuss the informational content of such signals and calibrate a more detailed definition of a true (“correct”) signal in terms of the payoffs of the sender and the receiver.

Keywords: Signals and signaling games; actions; states of nature; language convention; rational expectations equilibrium; information set; games with imperfect information; Nash equilibrium; perfect Bayesian equilibrium; beliefs updating (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:cty:dpaper:11/07

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