Table of Contents
Game Theory
Volume 2013, Article ID 754398, 12 pages
http://dx.doi.org/10.1155/2013/754398
Research Article

A Tree Formulation for Signaling Games

Department of Economics, City University London, Northampton Square, London ECIV OHB, UK

Received 15 February 2013; Accepted 10 May 2013

Academic Editor: Dimitrios P. Tsomocos

Copyright © 2013 Xeni Dassiou and Dionysius Glycopantis. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

The paper has as a starting point the work of the philosopher Professor D. Lewis. We provide a detailed presentation and complete analysis of the sender/receiver Lewis signaling game using a game theory extensive form, decision tree formulation. It is shown that there are a number of Bayesian equilibria. We explain which equilibrium is the most likely to prevail. Our explanation provides an essential step for understanding the formation of a language convention. The informational content of signals is discussed and it is shown that a correct action is not always the result of a truthful signal. We allow for this to be reflected in the payoff of the sender. Further, concepts and approaches from neighbouring disciplines, notably economics, suggest themselves immediately for interpreting the results of our analysis (rational expectations, self-fulfilling prophesies).