Sending Mixed Signals: Equilibrium Configurations Resulting From Signaling Dynamics

Abstract

This paper examines how signaling affects the equilibrium distributions of heritable, favourable, unobserved characteristics. It does so in developing a model of Partner Choice with signaling for heritable traits, and applies this model to a multilevel selection setting. Individuals interact in groups and have the unobserved binary strategy options to either contribute or not contribute to a public good. It is shown that (1) signaling can substantially increase equilibrium contributions to this public good; and that (2) different signalling equilibria can exist for a given parameter configuration, implying that the magnitude of this increase is not unique. Moreover, (3) a novel type of signalling equilibrium, in which all strategy types express the signal ("Pooling Signaling Equilibrium") is identified. This equilibrium is stable even though the signal holds no information in equilibrium. Further, it is shown that the level of cooperation in Pooling Signaling Equilibria is dependent on the difference in signaling costs of the different quality types.