Editing Signaling game (section)

==Costly versus cost-free signaling==

One significant application of signaling games in both [[economics]] and [[biology]] is to identify the conditions that allow honest signaling to serve as an equilibrium within the game. Essentially, this raises the question: under which circumstances can we anticipate that rational individuals or animals influenced by natural selection will disclose details regarding their types?

If both parties have coinciding interests, that is, they prefer the same outcomes in all situations, then honesty is an equilibrium. (Although in most of these cases, non-communicative equilibria also exist.)  However, if the parties' interests do not perfectly overlap, then the maintenance of informative signaling systems raises an important problem.

Consider a circumstance described by [[John Maynard Smith]] regarding transfer between related individuals. Suppose a signaler is starving or just hungry, and they can signal that fact to another individual with food. Suppose they would like more food regardless of their state but that the individual with food only wants to give them the food if they are starving. While both players have identical interests when the signaler is starving, they have opposing interests when the signaler is only hungry. When they are only hungry, they are incentivized to lie about their food needs. And if the signaler regularly lies, the receiver should ignore the signal and do whatever they think is best.

Economists and biologists have been interested in understanding the signaling stability in these scenarios. They have separately proposed that signal costs could be a factor. If sending a signal is expensive, it may only be justifiable for a starving individual to do so. Investigating when costs are essential to maintaining honesty has become a major research focus in both disciplines.