Semiparametric estimation of signaling games with equilibrium refinement

2021 ◽  
pp. 1-37
Author(s):  
Kyoo il Kim
Keyword(s):  
Semiparametric Estimation ◽  
Signaling Games ◽  
Equilibrium Refinement

Justified Communication Equilibrium

2021 ◽  
Vol 111 (9) ◽  
pp. 3004-3034
Author(s):  
Daniel Clark ◽  
Drew Fudenberg
Keyword(s):  
Cheap Talk ◽  
Learning Model ◽  
Signaling Games ◽  
Equilibrium Refinement ◽  
Strategy Profile ◽  
Stable Outcome

Justified communication equilibrium (JCE) is an equilibrium refinement for signaling games with cheap-talk communication. A strategy profile must be a JCE to be a stable outcome of nonequilibrium learning when receivers are initially trusting and senders play many more times than receivers. In the learning model, the counterfactual “speeches” that have been informally used to motivate past refinements are messages that are actually sent. Stable profiles need not be perfect Bayesian equilibria, so JCE sometimes preserves equilibria that existing refinements eliminate. Despite this, it resembles the earlier refinements D1 and NWBR, and it coincides with them in co-monotonic signaling games. (JEL C70, D82, D83, J23, M51)

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