Next Article in Journal
Topological Aspects of the Multi-Language Phases of the Naming Game on Community-Based Networks
Next Article in Special Issue
Epistemic Game Theory and Logic: Introduction
Previous Article in Journal
Cyclic Competition and Percolation in Grouping Predator-Prey Populations
Previous Article in Special Issue
Strategy Constrained by Cognitive Limits, and the Rationality of Belief-Revision Policies
Article Menu

Export Article

Open AccessArticle
Games 2017, 8(1), 11; doi:10.3390/g8010011

The Welfare Cost of Signaling

1
Economics area, New York University Shanghai, 1555 Century Ave, Pudong, Shanghai 200122, China
2
Economics Department, University of Missouri, 901 University Avenue, Columbia, MO 65211-1140, USA
*
Author to whom correspondence should be addressed.
Received: 17 August 2016 / Accepted: 18 January 2017 / Published: 9 February 2017
(This article belongs to the Special Issue Epistemic Game Theory and Logic)
View Full-Text   |   Download PDF [409 KB, uploaded 9 February 2017]   |  

Abstract

Might the resource costliness of making signals credible be low or negligible? Using a job market as an example, we build a signaling model to determine the extent to which a transfer from an applicant might replace a resource cost as an equilibrium method of achieving signal credibility. Should a firm’s announcement of hiring for an open position be believed, the firm has an incentive to use a properly-calibrated fee to implement a separating equilibrium. The result is robust to institutional changes, outside options, many firms or many applicants and applicant risk aversion, though a sufficiently risk-averse applicant who is sufficiently likely to be a high type may lead to a preference for a pooling equilibrium. View Full-Text
Keywords: costly signaling; social cost of signaling; asymmetric information; separating equilibrium costly signaling; social cost of signaling; asymmetric information; separating equilibrium
Figures

Figure 1

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

Scifeed alert for new publications

Never miss any articles matching your research from any publisher
  • Get alerts for new papers matching your research
  • Find out the new papers from selected authors
  • Updated daily for 49'000+ journals and 6000+ publishers
  • Define your Scifeed now

SciFeed Share & Cite This Article

MDPI and ACS Style

Yang, F.; Harstad, R.M. The Welfare Cost of Signaling. Games 2017, 8, 11.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Games EISSN 2073-4336 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top