Signaling games with endogenous types

Abstract

This paper examines a signaling game with endogenous types in which the sender can influence the property of his private information. We propose an equilibrium selection criterion, called criterion D3, which builds on criterion D1 from signaling games without endogenous types (Cho and Kreps 1987 and Cho and Sobel 1990). We examine the selected equilibrium properties and compare them to the equilibria selected under the existing selection rules.