poly: Countersignaling

I've just read the best paper I've seen in months! It presents
a model which plausibly explains why "the nouveau rich flaunt their
wealth, but the old rich scorn such gauche displays. Moderate
quality goods are advertized heavily, while high quality goods rely
on their reputation. Minor officials prove their status with petty
displays of authority, while the truly powerful show their strength
through gestures of magnanimity. The middle class are bastions of
mainstream culture, while priviledged youth are drawn to
countercultural lifestyles. People of average education show off
the studied regularity of their script, but the well-educated often
scribble illegibly. Mediocre students answer a teacher's easy
question, but the best students are embarrassed to prove their
knowledge of trivial points. Acquaintances show their good
intentions by politely ignoring ones flaws, while close friends
show intimacy by teasingly highlighting them. People of moderate
ability seek formal credentials to impress employers and society,
but the talented often downplay their credentials even if they have
bothered to obtain them. A person of average reputation defensively
refutes accusations against his character, while a highly-respected
person finds it demeaning to dignify accusations with a response."

That paper is:
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http://wueconb.wustl.edu/eprints/game/papers/9811/9811002.abs

Too Cool For School? A Theory of Counter-Signaling

By Nick Feltovich, Rick Harbaugh, and Ted To

In sender--receiver games high--quality types can distinguish
themselves from low--quality types by sending a costly signal.
Allowing for additional, noisy information on sender types can
radically alter sender behavior in such games. We examine
equilibria where medium types separate themselves from low
types by signaling, but high types then differentiate themselves
from medium types by not signaling, or countersignaling. High
types not only save the cost of signaling by relying on the
additional information to stochastically separate them from
low types, but in doing so they separate themselves from the
signaling medium types. Hence they may countersignal even when
signaling is a productive activity. To evaluate this theory we
report on a two-- cell experiment in which the unique Nash
equilibrium of one cell involves countersignaling by high types.
Experimental results confirm that subjects can learn to
countersignal.
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The paper does a great job explaining the model and giving example
applications. The experiments are a good idea, though poorly
executed.

Robin Hanson
hanson@econ.berkeley.edu http://hanson.berkeley.edu/
RWJF Health Policy Scholar FAX: 510-643-8614
140 Warren Hall, UC Berkeley, CA 94720-7360 510-643-1884
Received on Fri Dec 11 23:44:12 1998