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Pecuniary emulation and invidious distinction: Signaling under behavioral diversity

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  • Ishida, Junichiro
  • Suen, Wing

Abstract

We introduce behavioral diversity to an otherwise standard signaling model, in which a fraction of agents choose their signaling actions according to an exogenous distribution. These behavioral agents provide opportunities for strategic low-type agents to successfully emulate higher types in equilibrium, which in turn reduces the cost for strategic high-type agents to separate from lower types. Behavioral diversity thus improves the equilibrium payoffs to all types of strategic agents. The model also exhibits a convergence property, which is intuitively more appealing than the least-cost separating equilibrium of the standard setting.

Suggested Citation

  • Ishida, Junichiro & Suen, Wing, 2024. "Pecuniary emulation and invidious distinction: Signaling under behavioral diversity," Games and Economic Behavior, Elsevier, vol. 147(C), pages 449-459.
    • Handle: RePEc:eee:gamebe:v:147:y:2024:i:c:p:449-459
    DOI: 10.1016/j.geb.2024.08.008
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    1. Heidrun C. Hoppe & Benny Moldovanu & Aner Sela, 2009. "The Theory of Assortative Matching Based on Costly Signals," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(1), pages 253-281.
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    3. Aloisio Araujo & Daniel Gottlieb & Humberto Moreira, 2007. "A model of mixed signals with applications to countersignalling," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 1020-1043, December.
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    More about this item

    Keywords

    Least-cost separating equilibrium; Insensitivity to prior; Behavioral diversity; Equilibrium emulation;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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