Strategic inattention in the Sir Philip Sidney Game

Abstract

Infamously, the presence of honest communication in a signaling environment may be difficult to reconcile with small (relative) signaling costs or a low degree of common interest between sender (beneficiary) and receiver (donor). This paper posits that one mechanism through which such communication can arise is through inattention on the part of the receiver, which allows for honest communication in settings where-should the receiver be fully attentive-honest communication would be impossible. We explore this idea through the Sir Philip Sidney game in detail and show that some degree of inattention is always weakly better for the receiver and may be strictly better. We compare limited attention to Lachmann and Bergstrom's (1998) notion of a signaling medium and show that the receiver-optimal degree of inattention is equivalent to the receiver-optimal choice of medium.

Keywords: Costly Signaling; Handicap Theory; Information Design; Strategic Inattention.