Bryan Caplan — Consciousness is All-Important: The Case of Signaling

I say the challenge in Robin's final sentence is easily answered: Conscious intentions are all-important for the welfare analysis of signaling. Standard signaling models assume that people dislike sending the signal. It is this assumption that implies that signaling equilibria are highly inefficient - or even full-blown Prisoners' Dilemmas. If people enjoyed signaling, in contrast, signaling equilbria could easily be ideal. What superficially appears to be a vast zero-sum game turns out to be fine because the players like playing the game....

Econlog
Consciousness is All-Important: The Case of Signaling
Bryan Caplan | Professor of Economics, George Mason University