Signaling games A signaling game is a dynamic game of incomplete information involving two players: a Sender(S)and a Receiver(R) Timing of the game is as follows 1. Nature draws a type t, for the Sender from a set of feasible types T=t, .. t according to a probability distribution p(ti), where p(ti)>0 for every i and p(t,)+.+p(t)=1 2. The Sender observes t; and then chooses a message m; from a set of feasible M=m, 3. The Receiver observes m, (but not t]) and then chooses an action ak from a set of feasible actions A=(a,. axl 4. Payoffs are given by Us( m; ak) and UR( m; aR) 10Signaling Games • A signaling game is a dynamic game of incomplete information involving two players: a Sender (S) and a Receiver (R) • Timing of the game is as follows: – 1. Nature draws a type t i for the Sender from a set of feasible types T={t1 ,…,t I } according to a probability distribution p(t i ), where p(t i )>0 for every i and p(t1 )+…+p(t I )=1 – 2. The Sender observes t i and then chooses a message mj from a set of feasible M={m1 ,…,. mJ } – 3. The Receiver observes mj (but not t i ) and then chooses an action ak from a set of feasible actions A={a1 ,…,aK} – 4.Payoffs are given by US (t i ,mj ,ak ) and UR(t i,mj ,ak ) 10