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A tree formulation for signaling games

Dassiou, X. and Glycopantis, D. (2011). A tree formulation for signaling games (Report No. 11/07). London, UK: Department of Economics, City University London.

Abstract

We provide a detailed presentation and complete analysis of the sender/receiver Lewis signaling game using a game theory extensive form, decision tree formulation. The analysis employs well established game theory ideas and concepts. We establish the existence of four perfect Bayesian equilibria in this game. We explain which equilibrium is the most likely to prevail. Our explanation provides an essential step for understanding the formation of a language convention. Further, we discuss the informational content of such signals and calibrate a more detailed definition of a true (“correct”) signal in terms of the payoffs of the sender and the receiver.

Publication Type: Monograph (Discussion Paper)
Additional Information: © 2011 the authors.
Publisher Keywords: Signals and signaling games, actions, states of nature, language convention, rational expectations equilibrium, information set, games with imperfect information, Nash equilibrium, perfect Bayesian equilibrium, beliefs updating
Subjects: H Social Sciences > HB Economic Theory
Departments: School of Arts & Social Sciences > Economics > Discussion Paper Series
URI: http://openaccess.city.ac.uk/id/eprint/1455
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