Persuasion and learning by countersignaling

Kim Sau Chung*, Péter Eső

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    7 Citations (Scopus)

    Abstract

    We model countersignaling (i.e., very high types refraining from signaling) arising from the tradeoff between persuasion and learning in a signaling game. We assume that the agent has imperfect private information regarding his/her productivity, which the signaling action provides additional verifiable information about. A higher-type agent benefits more from providing such objective, albeit imprecise, "proof" for the market, but may also gain less from learning about his/her productivity. When the latter effect dominates the former for the very high types, the equilibrium exhibits countersignaling: very high and low types pool on refraining from signaling, and only the medium types signal. Under certain conditions, the countersignaling equilibrium is the unique pure-strategy perfect sequential equilibrium.

    Original languageEnglish
    Pages (from-to)487-491
    Number of pages5
    JournalEconomics Letters
    Volume121
    Issue number3
    DOIs
    Publication statusPublished - Dec 2013

    Scopus Subject Areas

    • Finance
    • Economics and Econometrics

    User-Defined Keywords

    • Countersignaling
    • Learning
    • Persuasion
    • Signaling

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