Passive equilibria in signaling games with strong preferences

Passive equilibria in signaling games with strong preferences

Wednesday, 23 June 2021, 15:00-16:15

Room: Zoom

Presenter: Ropero García Miguel Ángel, Department of Applied Economics, University of Malaga, Spain

In this paper, we study a general class of monotonic signaling games in which there are multiple equilibria. In those games, when the sender has strong preferences for one value of the signal and the receiver responds to it by choosing the sender´s most preferred action, a type of equilibria in which the sender chooses that value of the signal is more plausible than others. When the single crossing condition is not satisfied, we develop a new refinement, the passive equilibrium, which will be useful to select only that type of plausible equilibria in those games, whereas other refinements cannot discard other equilibria. Moreover, the equilibria selected by standard refinements are the same as those selected by ours only when that condition is satisfied. Therefore, the passive equilibria are robust to the specification of the single crossing condition, whereas other refinements are not. Finally, we apply our notion of equilibria to an extension of the Spence´s model where education is productive and the employer offers the worker a wage structure instead of a wage.


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