Signaling games

Signaling games are a type of interaction in economic theory and game theory where individuals send signals to convey information about themselves or their intentions. For example, a job applicant might signal their skill level by obtaining a degree, while an employer interprets this signal to make hiring decisions. In this context, the “signal” (like the degree) helps one party gauge the quality or capability of another. These games illustrate how communication and information exchange can impact decisions and strategies in various settings, such as markets, relationships, and negotiations.