In many real-world settings, an action that affects the value of a product or service is self-reported rather than publicly observable. We investigate self-reporting when self-reports serve as a signal of sender productivity. In our model, a sender chooses an action and then sends a message concerning the action to multiple receivers. Receivers then bid for the sender’s service after deciding whether to audit the sender. We find that self-reporting can reverse the standard result in signaling models that there is overinvestment in the action and that the possibility of misrepresentation may in fact improve welfare given self-reported signaling.
CITATION STYLE
Jungbauer, T., & Waldman, M. (2023). Self-Reported Signaling. American Economic Journal: Microeconomics, 15(3), 78–117. https://doi.org/10.1257/MIC.20210204
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