American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Dynamic Noisy Signaling
American Economic Journal: Microeconomics
vol. 10,
no. 2, May 2018
(pp. 225–49)
Abstract
This article studies costly signaling. The signaling effort is chosen in multiple periods and observed with noise. The signaler benefits from the belief of the market, not directly from the effort or the signal. Optimal signaling behavior in time-varying environments trades off effort-smoothing and influencing belief exactly when it yields a return. If the return to signaling first increases over time and then decreases, then the optimal effort rises slowly, reaches its maximum before the return does, and declines quickly. Advertising data displays this pattern.Citation
Heinsalu, Sander. 2018. "Dynamic Noisy Signaling." American Economic Journal: Microeconomics, 10 (2): 225–49. DOI: 10.1257/mic.20160336Additional Materials
JEL Classification
- C73 Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
- D12 Consumer Economics: Empirical Analysis
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- M31 Marketing
- M37 Advertising
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