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Too Cool for School? A Theory of Countersignaling

Nick Feltovich (), Rick Harbaugh () and Ted To

Game Theory and Information from University Library of Munich, Germany

Abstract: In sender--receiver games high--quality types can distinguish themselves from low--quality types by sending a costly signal. Allowing for additional, noisy information on sender types can radically alter sender behavior in such games. We examine equilibria where medium types separate themselves from low types by signaling, but high types then differentiate themselves from medium types by not signaling, or countersignaling. High types not only save the cost of signaling by relying on the additional information to stochastically separate them from low types, but in doing so they separate themselves from the signaling medium types. Hence they may countersignal even when signaling is a productive activity. To evaluate this theory we report on a two-- cell experiment in which the unique Nash equilibrium of one cell involves countersignaling by high types. Experimental results confirm that subjects can learn to countersignal.

JEL-codes: C72 D82 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-gth and nep-mic
Date: 1998-11-07
Note: Type of Document - Tex; prepared on IBM PC ; to print on any;
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