Showing Off or Laying Low? The Economics of Psych-outs Articles uri icon

publication date

  • February 2022

start page

  • 529

end page

  • 580

issue

  • 1

volume

  • 14

International Standard Serial Number (ISSN)

  • 1945-7669

Electronic International Standard Serial Number (EISSN)

  • 1945-7685

abstract

  • We analyze the incentives for showing off, which we model as a costly signaling game, and study the consequences of norms against such behavior. Prior to competing in a contest, a newcomer can signal his talent to an incumbent. In equilibrium, costly signaling of ability occurs only when the newcomer is exceptionally talented. In such situations signaling benefits both contestants: the newcomer for obvious reasons; the incumbent by economizing on wasted effort in the contest. Our results rationalize the emergence of norms against showing off in settings where total effort is important. When selection efficiency matters, such norms decrease welfare

subjects

  • Economics

keywords

  • showing off; norms; selection; contests