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Hypothesis testing equilibrium in signaling games

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  • Sun, Lan

    (Center for Mathematical Economics, Bielefeld University)

Abstract

In this paper, we propose a definition of Hypothesis Testing Equilibrium (HTE) for general signaling games with non-Bayesian players nested by an updating rule according to Hypothesis Testing model characterized by Ortoleva (2012). An HTE may be different from a sequential Nash equilibrium because of the dynamic inconsistency. However, when player 2 only takes zero-probability message as an unexpected news, an HTE is a refinement of sequential Nash equilibrium and it survives Intuitive Criterion, but not vice versa. We provide existence theorem covering a broad class of signaling games often studied in economics, and the constrained HTE is unique in such signaling games.

Suggested Citation

  • Sun, Lan, 2016. "Hypothesis testing equilibrium in signaling games," Center for Mathematical Economics Working Papers 557, Center for Mathematical Economics, Bielefeld University.
    • Handle: RePEc:bie:wpaper:557
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    File URL: https://pub.uni-bielefeld.de/download/2903536/2903537
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    References listed on IDEAS

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    Keywords

    Signaling Games; Hypothesis Testing Equilibrium; Equilibrium Refinement;
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