Signaling Games with Costly Monitoring

Reuben Bearman

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arXiv · 2302.01116

Signaling Games with Costly Monitoring

Reuben Bearman

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Abstract

If in a signaling game the receiver expects to gain no information by monitoring the signal of the sender, then when a cost to monitor is implemented he will never pay that cost regardless of his off-path beliefs. This is the argument of a recent paper by T. Denti (2021). However, which pooling equilibrium does a receiver anticipate to gain no information through monitoring? This paper seeks to prove that given a sufficiently small cost to monitor any pooling equilibrium with a non-zero index will survive close to the original equilibrium.

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Reuben Bearman. 2023-02-02. Signaling Games with Costly Monitoring. https://arxiv.org/abs/2302.01116

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