Signaling in deterministic and stochastic settings

Thomas Jeitschko and Hans-Theo Normann

No 35, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: We contrast a standard deterministic signaling game with one where the signal-generating mechanism is stochastic. With stochastic signals a unique equilibrium emerges that involves separation and has intuitive comparative-static properties as the degree of signaling depends on the prior type distribution. With deterministic signals both pooling and separating configurations occur. Laboratory data support the theory: In the stochastic variant, there is more signaling behavior than with deterministic signals, and less frequent types distort their signals relatively more. Moreover, the degree of congruence between equilibrium and subject behavior is greater in stochastic settings compared to deterministic treatments.

Keywords: experiments; learning; noise; signaling; stochastic environments (search for similar items in EconPapers)
JEL-codes: C7 C9 D8 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cta, nep-exp, nep-gth, nep-mic and nep-ore
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Signaling in deterministic and stochastic settings (2012)
Working Paper: Signaling in Deterministic and Stochastic Settings (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:35

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