Fixed-Equilibrium Rationalizability in Signaling Games

Posted: 19 Feb 2014

See all articles by Lars Stole

Lars Stole

University of Chicago - Booth School of Business

Joel Sobel

University of California at San Diego

Inigo Zapater

Independent

Date Written: April 13, 1990

Abstract

This paper studies equilibrium refinements in signaling games through an examination of rationalizability in derived games obtained by replacing the equilibrium path with a sure outcome that yields the equilibrium payoff to all players. The informed player chooses between the sure payoff and sending an out-of-equilibrium signal from the original game. Whether or not the strategy of choosing the sure payoff is rationalizable is related to the iterated intuitive condition (divinity) when the original game is viewed as having imperfect (incomplete) information. Our results also demonstrate the significance of testing out-of-equilibrium signals as a set rather than individually.

Keywords: Contract theory, Incentives

JEL Classification: C70, D82

Suggested Citation

Stole, Lars A. and Sobel, Joel and Zapater, Inigo, Fixed-Equilibrium Rationalizability in Signaling Games (April 13, 1990). Journal of Economic Theory, Vol. 52, No. 2, 1990, Available at SSRN: https://ssrn.com/abstract=2397279

Lars A. Stole (Contact Author)

University of Chicago - Booth School of Business ( email )

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Joel Sobel

University of California at San Diego ( email )

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United States
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619-534-7040 (Fax)

Inigo Zapater

Independent ( email )

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