TY - JOUR

T1 - Only Time Will Tell

T2 - Credible Dynamic Signaling

AU - Starkov, Egor

PY - 2023/12

Y1 - 2023/12

N2 - This paper characterizes informational outcomes in a model of dynamic signaling with vanishing commitment power. It shows that contrary to popular belief, informative equilibria with payoff-relevant signaling can exist without requiring unreasonable off-path beliefs. The paper provides a sharp characterization of possible separating equilibria: all signaling must take place through attrition, when the weakest type mixes between revealing own type and pooling with the stronger types. The framework explored in the paper is general, imposing only minimal assumptions on payoff monotonicity and single-crossing. Applications to bargaining, monopoly price signaling, and labor market signaling are developed to demonstrate the results in specific contexts.

AB - This paper characterizes informational outcomes in a model of dynamic signaling with vanishing commitment power. It shows that contrary to popular belief, informative equilibria with payoff-relevant signaling can exist without requiring unreasonable off-path beliefs. The paper provides a sharp characterization of possible separating equilibria: all signaling must take place through attrition, when the weakest type mixes between revealing own type and pooling with the stronger types. The framework explored in the paper is general, imposing only minimal assumptions on payoff monotonicity and single-crossing. Applications to bargaining, monopoly price signaling, and labor market signaling are developed to demonstrate the results in specific contexts.

U2 - 10.1016/j.jmateco.2023.102894

DO - 10.1016/j.jmateco.2023.102894

M3 - Journal article

VL - 109

JO - Journal of Mathematical Economics

JF - Journal of Mathematical Economics

SN - 0304-4068

M1 - 102894

ER -