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Good signals gone bad: Dynamic signalling with switched effort levels

Heinsalu, Sander

Description

This paper examines signalling when the sender exerts effort and receives benefits over time. Receivers only observe a noisy public signal about the effort, which has no intrinsic value. The modelling of signalling in a dynamic context gives rise to novel equilibrium outcomes. In some equilibria, a sender with a higher cost of effort exerts strictly more effort than his low-cost counterpart. The low-cost type can compensate later for initial low effort, but this is not worthwhile for a...[Show more]

CollectionsANU Research Publications
Date published: 2017
Type: Journal article
URI: http://hdl.handle.net/1885/139362
Source: Journal of Mathematical Economics
DOI: 10.1016/j.jmateco.2017.10.001
Access Rights: Open Access

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