American Economic Journal: Microeconomics
no. 3, August 2023
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.
Jungbauer, Thomas, and Michael Waldman.
American Economic Journal: Microeconomics,
Asymmetric and Private Information; Mechanism Design
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Higher Education; Research Institutions
Returns to Education
Human Capital; Skills; Occupational Choice; Labor Productivity