Too cool for school? Signalling and countersignalling

Nick Feltovich, Richmond Harbaugh, Ted To

Research output: Contribution to journalArticleResearchpeer-review

110 Citations (Scopus)

Abstract

In signalling environments ranging from consumption to education, high-quality senders often shun the standard signals that should separate them from lower-quality senders. We find that allowing for additional, noisy information on sender quality permits equilibria where medium types signal to separate themselves from low types, but high types then choose to not signal, or countersignal. High types not only save costs by relying on the additional information to stochastically separate them from low types, but countersignalling itself is a signal of confidence that separates high types from medium types. Experimental results confirm that subjects can learn to countersignal.

Original languageEnglish
Pages (from-to)630-649
Number of pages20
JournalRAND Journal of Economics
Volume33
Issue number4
DOIs
Publication statusPublished - 1 Jan 2002
Externally publishedYes

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