Credible Deviations from Signaling Equilibria.

Journal article

In games with costly signaling, some equilibria are vulnerable to deviations which could be "unambiguously" interpreted as coming from a unique set of Sender-types. This occurs when these types are precisely the ones who gain from deviating for any beliefs the Receiver could form over that set. We show that this idea characterizes a unique equilibrium outcome in two classes of games. First, in monotonic signaling games, only the Riley outcome is immune to this sort of deviation. Our result therefore provides a plausible story behind the selection made by Cho and Kreps' (1987) D1 criterion on this class of games. Second, we examine a version of Crawford and Sobel's (1982) model with costly signaling, where standard refinements have no effect. We show that only a Riley-like separating equilibrium is immune to these deviations.

Authors: Eső, P; Schummer, J

• Publisher: Springer
• Journal: International Journal of Game Theory
• Volume: 38
• Issue: 3
• Pages: 411 - 430
• Publication date: 2009-11-01
• DOI: 10.1007/s00182-009-0161-x
• ISSN: 0020-7276
• Language: English