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Pecuniary Emulation and Invidious Distinction: Signaling under Behavioral Diversity

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  • Junichiro Ishida
  • Wing Suen

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

  • Junichiro Ishida & Wing Suen, 2023. "Pecuniary Emulation and Invidious Distinction: Signaling under Behavioral Diversity," ISER Discussion Paper 1216, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:1216
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    References listed on IDEAS

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    More about this item

    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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