A Tree Formulation for Signaling Games
City University London - Department of Economics
City University London
May 10, 2013
Game Theory Hindawi Publishing Corporation Volume 2013, Article ID 754398, 12 pages
The paper has as a starting point the work of the philosopher Professor D. Lewis.We provide a detailed presentation and complete analysis of the sender/receiver Lewis signaling game using a game theory extensive form, decision tree formulation. It is shown that there are a number of Bayesian equilibria. We explain which equilibrium is the most likely to prevail. Our explanation provides an essential step for understanding the formation of a language convention.The informational content of signals is discussed and it is shown that a correct action is not always the result of a truthful signal. We allow for this to be reflected in the payoff of the sender. Further, concepts and approaches from neighbouring disciplines, notably economics, suggest themselves immediately for interpreting the results of our analysis (rational expectations, self-fulfilling prophesies).
Number of Pages in PDF File: 13
Keywords: signals, signaling games, actions, states of nature, language convention, rational expectations equilibrium, information set, games, imperfect information, Nash equilibrium, Perfect Bayesian equilibrium, beliefs updating
JEL Classification: C70, C72Accepted Paper Series
Date posted: February 16, 2012 ; Last revised: June 26, 2013
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