Signaling Covertly Acquired Information

Mehmet Ekmekci () and Nenad Kos

No 658, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University

Abstract: We study the interplay between information acquisition and signaling. A sender decides whether to learn his type at a cost prior to taking a signaling action. A receiver responds after observing the signaling action. In the benchmark model where the sender’s information acquisition decision is observed the sender does not acquire information and, therefore, does not signal. A rationale for signaling is provided by the model in which information acquisition is covert. There, in the unique equilibrium outcome surviving a form of never weak best response refinement the sender does acquire information and signals when the information is cheap.Keywords: Signaling, information acquisition, refinements. JEL Classification Numbers: D82, G34.

Date: 2020
New Economics Papers: this item is included in nep-des and nep-mic
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